Provide An Allowance
To help your child understand how money and finances work, you need to start by teaching them how to earn the money that they will ultimately save. Give your child chores or tasks to do around the house and provide them with a weekly or monthly allowance for the completion of their duties. As they start to work for their own money, they are more likely to see value in the items purchased with it.
Show Them How to Save Up For a Desired Item
Now that your child is earning money they probably have their eye on something they would like to buy with it. If your child has a desired toy they want, don't purchase it for them. Instead, show them how they can save up a portion of their allowance each week to buy the toy on their own. You can help them record their savings and calculate a timeline to achieve their goal.
Have Conversations With Them
Parents want their children to embrace childhood and not get bogged down with the idea of finances. It is best to build the foundation of financial responsibility when they are young, so it carries into their adulthood. Involve them in conversations about money during daily chores or activities such as grocery shopping. It can be as simple as challenging them to hunt for the best deal in the grocery store as you work down your list.
Introduce the Concept of Investing
While investing may seem irrelevant to your child right now, introducing the concept earlier in life can help their preparedness in the future. Make a fun activity surrounding investing by having your child help you research some companies worthy of your investment. Explain to them what to look for and what those numbers mean once they find them. Then make the decision together to invest a little money on their behalf. Monitor the investment and continue to teach them along the way.
Model Good Money-Saving Behavior
As mentioned earlier, children learn by mimicking their parent's behaviors. As a financial role model, it is up to you to implement useful methods for saving money and help your children understand the practice. Show them the value of working towards financial goals instead of condoning impulse purchasing behavior that can end up creating a significant amount of debt.
Help your child succeed on their road to good saving habits by providing a method of income, opening up a savings account for them or giving them a piggy bank, setting savings goals, and being a healthy financial role model.
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