Money: Teach your kids good saving habits

9 tips to help your child manage their money

Money isn’t a simple concept to understand when young, but it’s possible to initiate your children to the concept of finances early on. Then, as they get older, you can build up to more and more advanced notions. Here’s how.

1. Talk to your children about money

Money can be a taboo subject in many families, but don’t be afraid to talk about money with your kids! In the beginning, it’s a matter of helping them understand the concept and value of money. Then, years later, you can teach them the importance of saving before buying, rather than relying on credit!

Important! While it’s critical you guide them and provide advice, it’s equally essential you let your kids decide how they use their money on their own. Making mistakes or spending impulsively and having to deal with the consequences is how they’ll learn the most.

When they’re older, you can demystify the principles of credit, how to use a credit card and the interest rate it may include, without demonizing borrowing—a tool that may prove useful in their future.

2. Get a piggy bank

Give your child a piggy bank and explain how saving will help them achieve their dreams. Make the action of putting money into a piggy bank a positive experience, starting at a young age. Kids love to imitate adults and pretend they’re “grown-ups” too.

Teach them to put money into their piggy banks regularly. Whether it’s money from the tooth fairy for the little ones, or money earned doing chores—into the piggy bank it goes!

3. Put a portion of every cash gift into savings

When your child is gifted money for the holidays or their birthday, teach them to split it in half: dedicating one half for fun and the other for savings. Saving half of the money you earn is a good reflex to learn. It helps make saving natural and important for your child.

4. Help them achieve their goals

To demonstrate the value of money to your child, encourage them to save a portion of the amount needed to buy something they have their heart set on. It’s a win-win.

By saving over several weeks to buy something they really want, they’ll learn about the effort it takes to accumulate a more significant amount of money. What’s more, they’ll be even more appreciative of what they buy because they’ll have achieved a goal.

At the same time, they’ll learn to differentiate between real needs and fleeting desires.

5. Make a budget with your child

Especially if they have a goal in mind, by following the major steps of a budget and keeping track of their spending, your child will realize that it’s possible to save at any age. Putting a little bit aside means helping them dream!

6. Help them save by adding your own contribution

To inspire your child to save, you can make a contribution every time they put money away. For example, if they save $5 toward a goal, you can add $1 to the pot. This initiative will likely have a strong motivating effect for your child to save more.

Psst! As a parent, you can also save for your child’s education by contributing to a registered education savings plan (RESP)!

7. Open a bank account in your child’s name

As soon as your child is old enough to have a bank account, help them through the process of opening one, and make it an important moment. They’ll remember this milestone in which they proudly deposited their savings into their own account, like a grown-up.

To help them start building a little fund, offer them some pocket money in exchange for doing chores, such as shovelling snow, tending the yard and so on. Adjust their “allowance” according to their age and needs.

Show them how you stay informed to properly save for your own projects.

8. Show them how you save regularly

Set an example for your little ones by showing them how you save regularly to achieve your own goals. Get them involved when you set a savings goal, such as for a family vacation. Make it a team project!

Point out the milestones as you draw closer to reaching your objective and celebrate together once it’s been achieved. This will help to create a positive view of saving and help instill in your child the idea that it can be fun to save!

9. Talk about investing with your teens

To continue their financial education, discuss more complex topics with your teenagers, such as retirement savings, post-secondary education, compound interest, etc. You’ll be surprised at what they’ve already gleaned from school, social media and other sources.

Start young: Lay the foundation for your child’s financial future

One of a parent’s greatest wishes is that their child should live safely and comfortably, without having to worry about the challenges associated with poor financial management and growing debt. To do so, it’s always better to start teaching them healthy financial habits early!

At the end of the day, nickels and dimes make dollars, and dollars make bigger bucks!