April 22 is designated as Teach Children to Save the Day to help kids become smart about money from as early as the age of 1 year. But, will just one day suffice those lessons? Maybe not, and that’s why parents must devote time every single day to teach their children the value of money.
According to a 2020 T. Rowe Price Survey, only 49% of adults consider themselves “excellent” or “very good” when grading their knowledge of personal finance. And, this unfortunate statistic makes financial literacy for the next-gen even more critical.
Saving money is a habit that takes time to build; some adults are yet to master this art. As of November 2020, 63% of Americans had no savings to meet their emergency expenses. And, that’s when you should teach your teens the financial skills in these good times and the bad.
With that in mind, here are some actions you can take to get your children and yourself too on the savings bandwagon.
● Discuss Wants vis-a-vis Needs:
The first step that helps kids learn the value of saving is distinguishing between wants and their needs. If you have a teen, it’s the right time to explain that needs include basics such as shelter, food, healthcare, essential clothing, and education. On the other hand, wants are all the extras like movie tickets, designer sneakers, candies, or the latest smartphone.
Make your teen understand the differences by illustrating your own experiences.
● Let them Earn their Own Money:
According to a survey, around two-thirds of parents enumerated that they paid their children an allowance. Children got to earn approximately $30 in a week, based on five hours of chores.
Financial experts say that if you want your children to become savers, you should allow them to earn their own money and save it to meet their wants. Also, offering allowances in exchange for chores enables them to learn the value of hard work.
● Provide a Place for them to Save:
While parents have been emphasizing using a piggy bank to save money from a very early age, a bank account is a must-have as children age.
Yes, parents need to set them up with their checking or savings account at a bank. Also, sit along with a financial expert and illustrate the importance of a debit card for teens and how the same works wonders. By doing so, your teens will know the maxims of spending, saving, and managing their expenses. Also, through a debit card, your teens will be better prepared to have a credit card in the future.
This way, children know how their savings add up and how much progress they’ll be making towards their goals. Also, make sure you help them track their spending.
● Leave Some Rooms for Mistakes:
Part of having your children attain control over their money is to help them learn from their mistakes.
In the end, it’s all about helping our child steer away from making costly mistakes. Also, it’ll be of much help when you use the same mistake as a teachable moment. Thus, your children will know the to-dos and don’ts with their cash.
The Bottom Line- Assisting Teens Become Financially Smart
As parents, you need to teach your children some lessons to be learned. It is vital to make saving a regular part of your teen’s routine to lay the foundation for a sound financial future if you’re a parent.
Also, these tips are an excellent place to start.