How to Teach Kids to Budget and Save for Big Purchases
Do you remember the first big purchase you made as a kid? Maybe it was that shiny new bike you’d been eyeing up for months, or perhaps it was a video game console that promised hours of endless fun. Whatever it was, you probably didn’t think too much about the cost—you just knew you wanted it.
However, as we get older, big purchases become more complicated. Suddenly, we’re faced with mortgages, car payments, and student loans. And if we’re not careful, those little purchases we make along the way can add up quickly. That’s why it’s important to start teaching kids about budgeting and saving from a young age.
But how do you go about it? After all, kids aren’t exactly known for their patience or their long-term thinking. In this post, we’ll take a look at some fun and creative ways to teach kids about budgeting and saving for big purchases.
1. Start with the basics
Before you can teach your kids about budgeting and saving, they need to understand the basics. That means introducing them to concepts like income, expenses, and savings. You can even use fun games to help teach them about the value of money and how to make smart choices when spending it.
Once they have a basic understanding of these concepts, you can start introducing them to the idea of budgeting. Sit down with them and help them make a list of all their expenses, from snacks and toys to bigger items like electronics or sports gear. Then, have them allocate a certain amount of their money to each category. For example, they can designate 10% of their money for snacks and 15% for toys.
Next, talk to them about the importance of savings. Letting them know that it’s important to save money for future expenses can help them develop a responsible attitude towards spending. Show them how setting aside a portion of each paycheck or allowance can add up over time. You can also encourage your kids to think about real-world applications, such as saving up for a special vacation or gift.
Finally, make sure you emphasize the need to be prepared in case of unexpected expenses by having an emergency fund set aside. This will give your kids the peace of mind that they have something to fall back on if times get tough or an unexpected cost arises.
By teaching your kids the basics of budgeting and saving early on, they’ll be better prepared to make smart financial decisions as adults. So don’t hesitate to start the conversation today!
2. Use real-life examples
Kids learn best when they can see the concepts they’re learning in action. So, try using real-life examples to help them understand the value of budgeting and saving. For example, if your child is saving up for a new bike, you can use that as a way to teach them about setting goals and working towards them.
Or, you can use your own experiences to show them the benefits of budgeting and saving. If you’re planning a family vacation, for example, you can show them how you’re budgeting for the trip and making trade-offs between different activities and expenses.
3. Make it fun
Let’s face it – budgeting and saving aren’t exactly the most exciting things in the world. But that doesn’t mean you can’t make them fun! Try turning budgeting into a game, with rewards for hitting certain milestones or staying within a certain spending limit.
You can also get creative with your saving strategies. Encourage your kids to find ways to earn extra money, whether that’s through chores or by starting a small business. Then, help them set up a savings account and watch their money grow over time.
This free printable savings goal worksheet is meant to be colored in for easy tracking towards big money goals!
4. Consider setting up an allowance
Allowance is a great way to introduce children to money in a structured environment. It gives them an opportunity to learn how to manage their own funds without being able to access more from mom or dad if they run out. When it comes time for your child to save for that big purchase, allowance is a great foundation point. First, talk about what it will take for them to save up enough money for their desired item and set attainable goals along the way—you may want to reward them when they meet certain savings milestones!
5. Encourage extra work
Another great way to teach children how to budget and save is by encouraging extra work around the house or in the neighborhood. Encourage your child by offering fair compensation (and perhaps with some extra incentives!) when they complete tasks like mowing the lawn, washing the car, or walking the dog. Assign these tasks based on age-appropriate chores and emphasize that this is “extra” work beyond their normal daily routines so that they understand the value of working hard for something special.
Here are some ideas:
- Mow the lawn
- Wash the car
- Walk the dog
- Babysit for neighbors or family friends
- Do yard work like raking leaves, shoveling snow, and picking up trash in the area
- Help out with odd jobs around your house or a friend’s house (like painting or cleaning)
6. Open a savings account
Once your child has started saving, open up a bank account so he/she can keep track of their progress towards their goal! This also offers an opportunity for financial lessons from you as well as from bank personnel at local branches. Explain why interest rates are important and what it means when there are penalties for withdrawing too much money too soon; this will help foster good habits so he/she understands how banks work in general. Plus, having a dedicated savings account will help him/her stay organized and motivated throughout the process!
This free printable worksheet is helpful for walking your child through the thought process of finding a bank and opening their first savings account.
7. Lead by example
Finally, the best way to teach kids about budgeting and saving is to lead by example. If you’re constantly making impulsive purchases and living beyond your means, your kids are going to pick up on that behavior. But if you’re mindful of your spending and you make an effort to save for big purchases, your kids will learn those habits too.
So, next time you’re thinking about making an impulse purchase, stop and think about the example you’re setting for your kids. Remember, the lessons you teach them now will stick with them for a lifetime.
Teaching kids about budgeting and saving can seem daunting but with patience and practice, it can become second nature over time. Start with allowance as an introduction into managing money then encourage extra work around home or in the neighborhood while helping them open up a savings account along the way—not only will this give them an understanding of how banking works but also show them just how rewarding it can be when hard work pays off! By following these simple steps you’ll be able to teach your children not only how valuable hard work is but also why budgeting is important—especially when aiming towards bigger purchases down the road! Who knows, they may even thank you for it one day!
Ready to help your child learn important financial skills for a lifetime of success?
Order On Your Mark, Get Set, INVEST: A Kid’s Guide to Saving Money, Spending Wisely, and Investing in the Stock Market today and start empowering your young ones with the knowledge and tools they need to achieve financial independence. Don’t wait, invest in your child’s future now!