If you're a parent, one of your tasks is teaching your children healthy money management along with showing them how to develop healthy eating habits. Neither skill set comes naturally to children. The money management skills you talk to them about should include both responsible spending and regular saving. How you choose to help them understand finances depends on how old they are. Here are some guidelines.
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Under 7 years of age:
By the time a child is 6 or 7, he or she should be able to recognize coin values and understand the basic concept of using money to exchange for stuff you want. It's a perfect time to get them started on healthy attitudes toward money.
Provide a piggy bank
Very young children need to learn that saving is fun and positive. Piggy banks are cute for a reason--it makes putting aside money more appealing to this age group. You can always buy one and there are a wide variety to choose from. If you want to be a financial role model to your child where savings is concerned, then making one together and decorating it will serve you better.
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Help set a savings goal
When the younger set has a place to save like a piggy bank, then it's time to talk about what they want to save money for. Given the short time spans children operate in, help them choose a goal they can understand, such as a toy truck or a doll. Glue a picture of their want onto the piggy bank.
Demonstrate how interest works
Tell your child that whenever he saves a quarter you'll add a nickel and do so in a separate container from the piggy bank. Granted this is a better interest rate than you'll find at any financial institution, it still shows how money gains more value in a bank. It shows the child in a way he can understand.
About age 8 to 14:
"Tweens" are usually ready to take on simple responsibilities, make plans and consider consequences.
Give an allowance or assign chores you pay them to do
In order to save money, you first need to have money. Talk to your tween about how he or she can earn money. Encourage their entrepreneurial spirit by helping them open a lemonade stand or offer dog-walking services to your neighbors. Offer to pay them for extra household or outdoor tasks they don't usually do.
Sign your child up for a savings account
When deciding on the best savings account for your child, don't necessarily assume it's at your bank. Look for a financial institution that accepts a low minimum deposit, waives fees for children's accounts and is generally kid-friendly. You might consider one that offers an online game for kids like MoneyIsland. It targets kids 8 to 14 years and gives them basic financial facts in a fun way. This age group doesn't always think their parents know anything so an online game could be a win-win.
Encourage saving by matching what your child puts away
You may or may not want to match at 100 percent, but whatever percentage you choose, follow through on your promise. This will show your child how quickly she can make progress toward a savings goal.
Teach your child to comparison shop
If buying a brand name athletic shoe or pair of jeans means your child uses up all his hard-earned savings, he might be just as happy with a generic brand and having money left over. At least you can show him this possibility and let him decide.
15 and up
At this age, your teen (or adult offspring still living with you!) should be gainfully employed in some capacity. Whether they are lifeguarding, doing yard work, tutoring their peers on their favorite subject or selling clothing at a retail store, they should be bringing in some kind of income.
Co-sign for a credit card
Adding a credit card to their money responsibilities gets them ready for adult life. Just make sure they already have the money saved for whatever they charge on the card. If your teen doesn't understand this concept, cancel the card. Eventually, he will have his own card and learning to use credit responsibly while he's young is important. Spending money he doesn't have just won't do.
Encourage your teen to save before spending
Your teen's savings goals depend on their age and interests. A 17- or 18-year-old may well be dreaming of their first apartment away from home, a 16-year-old their first car and a 15-year-old a new snowboard. This is the time to introduce them to online savings accounts so they can track their own savings at minimal cost.
Most importantly, whatever your child's age, it's crucial for you to model good savings habits and a healthy attitude toward money.
The original article can be found at SavingsAccounts.com:
9 ways to teach your kids to save