To Save Or To Spend? Simple And Effective Ways To Raise Financially Savvy Kids

Ever wondered how to teach the value of hard-earned money to your young child? If your child hasn't already started saving small allowances, here are some fun ways to spend and save money wisely as they grow.

Set a goal together

Sit down together and set a goal, such as buying a new toy or a book. Make sure the item is not expensive. This way, your child can accumulate the savings in an achievable time frame, and not get frustrated for months and eventually lose interest.

Create three jars

Every time your child receives money from grandparents and loved ones, divide the money in pre-agreed proportions, in three jars labeled SAVE, SPEND, and SHARE. They can use the spending jar for small purchases like cookies. Have them use the savings jar to buy costly items like a superhero toy. And the sharing jar goes toward a cause or to help someone in need.

Track savings and spends

Children love to win. They love to see themselves moving closer to the end game. So, have your child count the money in each of the jars, every time they make a deposit. It's a fun activity! Encourage them to write down their purchases when making a withdrawal so that they can reflect on how they are spending their allowance.

Leave a little room for mistakes

It may be very tempting for you to stop your child when they make shortsighted purchases. But let them make mistakes. When they run short of money they will better understand what not to do with their money.

Role-play wants vs needs

Share the family budget with your child. Be open about it. Explain the money that is used for needs such as food, utility bills, and health care, and the money your family spends on wants such as travel, movie outings, and dining out. This activity will help your child understand the difference between needs and wants. This is one of the most important learnings you will impart to your child while helping them understand the value of money.

These activities will help your child learn about the importance of being patient, a very crucial life lesson. They will also help your child value their gifts more, and make them a responsible consumer. You need to set an example for your child. So, be mindful of money matters, and make sure you appreciate your child when they do well! Admit your mistakes openly, it might help your child avoid the same mistakes in the future.