Teaching Kids the Importance of Saving: Tips and Strategies

Saving money is an essential part of growing up, and I think as a grandparent  it is extremely important that we take great care in teaching our grandchildren.   Teaching them to save money at an early age helps them to develop important money management skills.  These skills will help them as they grow into responsible adults.  Sadly, I believe that this is a skill that parents/grandparents tend to assume they will automatically learn in school.  I firmly believe it is something that we need to teach at home!

TEACH THEM YOUNG

I always taught my own children and now my grandchildren the importance of learning to save at an early age.  By teaching them the basics of saving and making smart financial decisions, you can set them up for a lifetime of financial success. The first step in teaching your grandchildren how to create savings is to start early.  When they are really young, and they receive money, such as birthday money or an allowance, encourage them to set aside a portion in a savings account.  

TYPES OF SAVINGS

For our family as the kids got to be teenagers, we taught them several different rules for savings.  You should have an account for emergencies only.   The minimum for that account balance depends on what stage of life they are in.  In their early years (teenage) it is probably fairly minimal.  I always recommend the cost  of a major repair of a vehicle or new tires, etc.  That is assuming they have a car and a job.  If it is the early teenage years, maybe they are just saving for a car.  That is where the next savings account comes in. You should have a savings for whatever special thing you need, want or desire.  Let’s say as a teenager they had bought a car and they wanted a custom stereo system.   I have them sit down and figure out how much they will need for the purchase, how long they are willing to wait to get it and then how much they will need to put away each payday to achieve that goal.  

POWER OF INVESTING

Teaching your grandchildren the basics of saving money can also help them to understand the importance of investing. Explain to them the concept of investing and show them how investing in stocks, bonds, and other investments can help them to grow their money even more quickly over time. This will help them to understand the power of investing and why it is important to save and invest for the future. What better gift can you give your grandchild, other than the gift of investing in themselves!?  There are several great tools online that will help them figure out how they can make their money go to work for them.   I have found an easy to access one , if you click here you can see how this tool can you help you calculate savings. 

Finally, encourage your grandchildren to stay the course and to keep up with their savings and investing habits. Remind them that saving and investing require patience and consistency, and that it may take some time before they start to see results. By teaching them the value of staying disciplined and sticking to their plan, you can help them to develop the financial habits that will serve them for a lifetime. Teaching your grandchildren how to create savings is an important and rewarding task. By helping them to understand the basics of budgeting, saving, and investing, you can set them up for a lifetime of financial success