Science has taught us that children are like sponges – they soak up the most information when they are young. Linguistic experts always note that children who grew up hearing phonemes of other languages have an easier time learning the language when they are older. The same is true when it comes to learning about finances. The bottom line is: children pick up habits when they are young and it shapes who they are as adults.
Now, I am not advocating for you to sit your three-year old down to help you balance your checkbook – although, I would be impressed if they could do it! However, there are other ways to teach your children valuable lessons on saving, such as:
Games: Create a game where a child has to make choices and deal with the consequences of that choice. Monopoly is a great game to teach children about money they get a paycheck when they pass go, can buy properties, collect rent and at the same time deal with the tax man and other financial facts of life!
Day-to-Day Activities: Rather than buying your child that toy, book or candy that they have been begging you for, tell them to save up their money in a jar so they can buy it themselves When a few days, weeks, or months go by and the jar is full, ask your child if they still want that toy, book, or candy. If the answer is no, ask them why – the key to the lesson is that the child needs to arrive at the realization themselves. You can explain that buying what you want when you want it could lead to financial difficulties, or decrease the value you placed on these items.
Start from the beginning…The earlier a child learns the value of money and saving, the more likely they are to enjoy what they worked hard to earn and have more appreciation for how hard others work. Because children are like sponges, starting the habit of saving and understanding finances when they are young means they will be able to form their own habits later on in life.
They will already know how to save money. So many students who have their first job have the habit of burning through their paychecks. When a child learns the art of saving as a small child, they are savvy money managers by the time they are teens.
There are no surprises they can’t handle. Savvy savers don’t worry about emergencies, because they’ve learned how to save for the inevitable “What Ifs” in life. Teaching your children when they are pre-teens to save a portion of an allowance, cash gifts or job money in a savings account just for emergencies will groom them to be financially secure adults.
They understand the value of a dollar. Children who aren’t required to work for their rewards often don’t understand the value of a dollar and how hard it is to earn that dollar. The items gained lose value and are not treasured when they are not earned.
At a loss for a gift idea – how about a joint savings account! Take a trip to the bank together and let your child see the process, meet the bankers and handle the money. It’s something they won’t soon forget!
Assistant Branch Manager, Oakville