How to Help Children Develop Good Money Habits

Saving money in the modern age has become a quintessential affair, with being a basic necessity. With the passing age, the need to have your hands on your pocket has become necessary today, than ever before. Now, being financially educated is something that needs to be imbibed in a child from early.

This is an essential life skill that one cannot do without. Maintaining good financial or monetary savings can help build a secure financial or monetary foundation. Especially in the parental age or experience; managing, teaching, and organizing the money becomes a challenging task, and hence also elevates the challenge of understanding how the parents can help their children understand, develop, showcase, and manage the good money and financial habits in their age. The blog posted below is focused at explaining the different ways, tactics, or strategies that can help children develop good money and finance habits.

Strategies of teaching saving to kids and children

If kids and children are not taught of the effective management of money, it can be consequential and less optimal until they learn it with experience. Here are strategies to develop a sound fiancé saving plan:

Developing a Money-saving Habit

Firstly, kids of young age and adolescents must be provided with the learning of putting a clear jar to save money – calling it a piggy bank. Using a piggy bank as a money-saving habit among the children isa great idea. Moreover, a transparent jar for developing the money saving habit is always good as it can facilitate children to have a visual appearance of the total saved amounts. This would also encourage the children towards more saving habits.

Developing Parental Influences on Children

Further, setting an example for the kids and children – especially of the pre-school and adolescent age –can be an effective means to develop the habit of money saving among the children.

For instance, if parents show the habit of throwing things into a dustbin and not anywhere on the roads, the children will imitate the same due to exemplary reflection of the activity. In the likewise manner, if the parents seek to put an example of saving money every day, it will be imitated by the children automatically. Henceforth, setting an example of such habits can develop good money habits among the children.

Teaching ‘contentment’ to Children

For students and children under the teenage, there can be certain additional ways to develop good habits relating to money, savings, and finances. Teaching contentment is one of the most powerful ways to develop good money habits. Understanding, informing, and developing contentment among the children, for example, by explaining that the things possessed run well enough to be compared and replaced for the new ones.

Opening Children’s Bank Account for Effective Learning and Saving

Another major way or strategy is to involve the children in the responsibility to set a bank account and to do certain bank or money related tasks that require management, organizing, and decision-making. From the parental aspects, saying to your teenager,“Hey, can you please help me with doing a transaction?” or “Hey my son, can you please check my account balance on my behalf?” and so on.

By the time your kid’s a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above along the way. This takes money management to the next level, and will (hopefully) prepare them for managing a much heftier account when they get older.

Allowing the Children to Look Into Financial Activities

Helping the kids to learn constructive money habits by involving them in the weekly shopping of the household goods, creating monthly budgets, and much more can be another useful tactic. During visits to grocery store and other shops, let children take charge of the shopping lists. Encouraging them to choose the best products with value and use this situation to discuss spending, saving, planning, and more.

Budgeting should be a part of yours, as well as your kid’s life. The development of successful personal finance hinges on budgeting. Hence, training kids to budget for every little thing can be an optimal solution for developing good money habits.

Importance of developing good money habits among children

Nevertheless, modelling good financial behavior can be the first and foremost thing to act on among teenagers and youngsters. The first and most important thing to keep in mind is that children in the teenage and youth have a tendency to do what their parents or their elders do. Young aged children are very observant, and often adopt and soak in many actions simply from watching their parents.

Therefore, parents should model good financial behavior by showcasing positive financial habits and philosophies on a daily basis. This includes things like shopping on a set budget, using coupons and discount offers to pay less for goods, and making choices between new and used baby accessories, which can all make a huge impact on savings. Do your research to demonstrate the opportunity costs involved, and talk about money management.

Lets unfold the importance of saving money:

Financial Security

It helps us in building a secure financial foundation. Yet many of us learnt this only by trial and error, and experience.

For Early Learning of Savings and Investments

Unfortunately, our school education doesn't teach us the importance of savings. Children are often influenced by how their parents manage their finances. Hence, how we use money has a major impact on the child's relationship with money. Although, developing financial skills such as saving at a young age is always a good idea. But it is also a tricky topic for the parents to discuss with their kids since this has to be done at the right time.

For Developing the Habits Logically

There is no definitive age to start teaching kids about the value of money. But expert research suggests that good financial habits can be formed from the age of six. This is because, at this age, children develop the ability to apply logic to the idea of saving. The level of cognitive competence is well developed. 

There has been global research on understanding, analyzing, and promoting the money saving habits among children, kids, adolescents, etc. Such as shown on the website of various banks of Australia and worldwide (National Australia Bank – as shown in Fig1), there have been a great involvement of global banking institutions too to promote the teaching of good money saving habits among children.

Conclusion

Developing good money saving habits among children and adolescents have a lifestyle. It is important to have ongoing discussions with them about money. A good parent could do a weekly chat with them to explain more about the value of money. Making savings a regular part of a child's life can set the foundation for a great financial future.

In closure, there can be multiple ways to teach or learn the children for effective development of good money habits. Making a habit of piggy bank savings, allowing them to choose their own products like clothes, toys, etc. and communicating with them about the finances and opportunity costs, and so on can be effective ways to develop good money habits easily.