Being smart with money doesn’t always come easily. For parents, it’s important to instill a money saving mentality at an early age for your children.
This summer could serve as the perfect starting point for your young saver. The professionals at Broussard Poché, LLP, have a few money saving tips that could make the journey a bit easier.
Your child, from as early as the age of 3, can start to understand how money works and what it means to be smart with funds.
- They model behavior, if they see mom and dad being smart with money, they will notice
- Help them learn to identify coins and paper money and notice their value
- Buy a piggy bank and let them place gift money there
- When they ask for a toy or treat, respond with statements such as, “Well we have to save for that, maybe next time”
- Consider a weekly allowance for chores so they can learn how money is earned
This is the perfect time to lay a real financial foundation. Children, starting at age 8, become more aware of things, money, and how much items cost.
- Explain the difference between needing something and wanting something
- Encourage them to set aside portions of their allowance by the 50-25-25 rule. 50% for immediate spending, 25% set aside for a “big” item and, 25% for long-term savings
- Consider matching a portion of what they are saving. This could motivate your child to save
- Open a savings account for them so their money stays safe
- Help them set financial goals of their own
- Help them shop for sales and a good deal, and show them how price comparing works
- Introduce the concept of budgeting by explaining the family budget
These are the years where your child could face real consequences for not understanding money matters. This is also a great time to prepare them for quickly approaching college expenses.
- Encourage them to get a job and put that money towards some of their expenses
- Teach them about debit cards
- Show them how to wisely handle credit
- Introduce them to advanced financial matters such as diversified investments (there are even teen-oriented financial websites)
Not everyone is born with a head for numbers. It may take years of practice and continues conversations about smart money habits, but the payoff is worth the time invested.