28 Aug 2019
Invest: to commit (money) in order to earn a financial return – Merriam Webster
As we grow up, we start to understand the benefits of saving money, despite not being so straightforward. The result of investing is only visible after some time – saving is a process and cannot be quickened, but we cannot underestimate or undermine its importance. Saving money leads to a strong and secure financial foundation. Is it possible to start learning about such a practice at a younger age and to grow up understanding the advantages of investing? Here are 4 ways of how to teach and encourage kids to save money.
Practice what you preach. The simplest and most practical method to explain how to invest is by investing yourself! You need to set up an example to your children – if you spend most of your income immediately, children will probably grow up doing the same because that is what they are used to. Make it extremely clear that you are saving; put any extra money in a jar, in sight for the child to see the container being filled up gradually.
Explain why. Why? Children are curious and having a clear explanation for why saving is important would serve them throughout their life. If you’re confused yourself, we should save money to ensure that we will have money for any emergency that we may have in the future or to gain a product that we’ve wanted. Differentiate between what we need and what we want and prioritising between the two.
Get a piggy bank. Piggy banks make it easier for the kids to save. The received money, or a part of the sum is kept in the piggy bank until a specific target is reached. This is fun for kids and also works to instil the idea that saving money pays off.
Set goals. Challenges are often engaging for children and would also help motivate them to save more. Setting a timeline, for example, or a specific amount would encourage the young ones to make the most out of their pocket money. Once the target is reached, think of a reward that the kids might enjoy, helping them understand the reason for saving.