We all understand the need to save money regularly. But do you know just how beneficial it can be? A 10 year old setting aside just $20 per week into a savings account until they are 18 adds up to $7,680. When interest and the time value of money is figured into the equation, the amount would exceed $10,000. Young people who understand the importance of saving money may never have to worry about seeking out fast debt solutions later on in life. Saving for our children’s futures ourselves is another option.
Teaching Kids About Saving and Managing Money
Kids who are taught how to save and manage money at very young ages often grow up with “money smarts”. A great way to introduce the concept of saving money to a child is by using a piggy bank and depositing money into it occasionally as a reward for good behavior. As a reward for diligently saving their money, the piggy bank can be emptied and partially (or even entirely) used for a special toy or game. Allowing kids to buy their own toys will show them the importance of making wise choices with their money; you can only spend that money once!
Kids who are slightly older can learn about saving money if they are given a reasonable allowance on a weekly basis. Opening a savings account for a child is also a good idea – especially with all the savings account incentives available for minors. Parents should encourage their children to save some of their allowance money for things they really want or need, rather than spend it all as soon as they receive it. When kids learn first-hand that money doesn’t grow on trees and that you generally have to do something to earn it, they may be less likely to get in debt for things they can’t really afford as they get older.
Saving Money Goes Beyond Putting Away Cash
There are lots of other practical ways to save money besides physically putting it away in a safe place. Parents can set good examples for their children by living frugally. This doesn’t mean doing without anything extra at all, but rather, making children understand that things that cost money shouldn’t be taken for granted or wasted. Some parents put this idea into practice by limiting “treats” like fast food to once or twice per month rather than multiple a times a week and reserving expensive gifts for birthdays, the holidays, or whenever a child has saved up enough money on their own to buy what they want.