We all want our children to be happy and secure in life, and would like to give them enough support so they have the best chance at achieving their ambitions. It is easy to think that helping our kids out with money or paying for large expenses is a good way of doing this. In the long run however, teaching your children the true value of money will be much more valuable lesson. Here’s how to teach your children about saving money and budgeting.
Give knowledge not money
The old adage of ‘Give a man a fish and he will eat for a day, teach a man to fish and he will eat for a lifetime’ is certainly true when it comes to children and money. Teaching your children how to budget and save will allow them to enjoy self made wealth beyond the time when you are able to support them. Warren Buffet once said “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing”.
Start a savings habit
From the very beginning establish a pattern of saving with your children so it becomes a habit. Teach them to split their money into different components; some for spending, some for keeping. You might even want to split it three ways; spending, short term keeping, and long term keeping. Whatever you choose, make sure it is done religiously so it becomes ‘just what you do’.
Long time periods are hard to understand at any age, but especially so when you’re young. Try to help your children appreciate the value long term planning and saving through demonstration. Start regularly saving or investing a small amount of money from when your children are born. Once they are old enough to understand, you can use this to demonstrate the benefit of small but regular savings and compounding.
Demonstrate good technique
Ultimately children will adopt their behaviours from the example of those around them. Make sure you are spending your money wisely and saving to achieve your own financial goals. Your actions will speak much louder than any words you ever say, so consider what example you are setting for your children.
Using these tips will help you teach your children the value of saving and budgeting. Remember that kids learn the most from watching others, so ensure you are saving and budgeting as well.