22 Ways You Can Start Teaching Money Habits from an Early Age
15th June 2023
Teaching money habits to children early in life can be a valuable life skill that can help them achieve financial stability and independence. Parents play an important role in shaping their children's financial habits and attitudes towards money. That's why it's a good idea that parents help their children develop responsible spending habits and a strong financial foundation by instilling good money habits at an early age.
Thankfully, there are several easy ways to teach children to save early, such as setting a positive example, encouraging savings, teaching budgeting skills, using visual aids, and discussing financial values. Here's a closer look at how to help your child develop a healthy relationship with money and set them on the path to financial success!
1. Set a Good Example
Children learn by watching their parents, so it's important to model good financial habits yourself. Let your children see you budgeting, saving, managing money and making smart financial decisions.
2. Encourage Your Child to Save
Set up a savings account for your child and encourage them to deposit a portion of their allowance, any weekly pocket money they receive, or any money they receive as gifts. Help them set a savings goal, such as a new toy or a special outing, and track their progress together.
If you have young kids, you could give your little one a piggy bank to start teaching your little ones about money and savings.
3. Teach Your Children to Budget
Encourage your children to create a budget by identifying their needs and wants, setting spending limits, and tracking their expenses. This will help them learn to make thoughtful decisions about their money and avoid overspending.
You could just do this on paper, colour-coding different aspects, or for older kids and teenagers, it may be time to break out the spreadsheets.
4. Consider Using Visual Aids
Use a jar or piggy bank to help your children visually track their savings progress. This can be a fun way to make saving money more tangible and engaging and is a great tool to use when you start teaching money to younger children.
5. Let Your Children Help You Shop
When you go shopping, involve your children in the process. Teaching kids how to compare prices, look for deals, and make thoughtful purchasing decisions will help them to come far with financial education, especially in their adult life. Plus it can often be a fun game to play.
6. Talk About Financial Values
Take the time to discuss financial values with your children, such as the importance of delayed gratification, the value of hard work, and the benefits of saving. Help them understand that making smart financial decisions can help them achieve their goals and live a more fulfilling life.
Note: As a parent, it's worth reflecting on your own financial mindset before passing on your own views. If you don't have a positive money mindset yourself, like believing money is bad, it's important to be conscious of this and the impact it will have.
7. Discuss Needs vs Wants
Help your children understand the difference between essential needs and discretionary wants. Teach them to prioritise their spending based on their needs and save for what they want. This will be helpful when teaching your children how not to spend money on impulse purchases.
8. Give Your Children an Allowance
Giving your children a regular allowance is a great way to teach them the value of money and how to manage it. By giving your children their own money, you'll give them the opportunity to learn how to handle money. Encourage them to save a portion of their allowance each week or month.
9. Play Financial Games
Many fun and educational games can teach children about budgeting, saving, and investing. For example, games like Monopoly or The Game of Life can teach kids about money management skills in a fun and engaging way. The Game of Life is a great way to introduce household expenses to your children and begin their journey to financial literacy.
10. Teach Your Children About Frugalness
Encourage your children to find ways to save by turning off lights when they leave a room or looking for deals on items they want to buy. This will help them develop a frugal mindset that will serve them well.
11. Help Your Child Earn Money
Encourage your children to earn money by doing chores around the house or starting a small business, such as a dog walking service. This will teach them the value of hard work and give them a sense of accomplishment when they save their earnings.
12. Set Long-Term Savings Goals
Help your children set long-term savings goals, such as saving for a college education or a down payment on a house. This will help them learn the value of long-term planning and encourage them to make smart financial decisions.
13. Use Online Tools
There are many online resources available that can help children learn about money management skills. With just a quick Google, you can find plenty of age-appropriate financial lessons and activities.
14. Give Your Children a Savings Goal Chart
Encourage your children to set a savings goal and create a chart to track their progress. This will help them visualise their progress and stay motivated to save. Also, a savings goal chat will give your child a visual tool to understand the possible consequences of financial decision-making.
15. Don't Hide Money Discussions
Don't shy away from discussing money with your children. Encourage open and honest conversations about money and answer their questions as honestly as possible. This will help them better understand financial concepts and feel more comfortable talking about money.
16. Talk About Impulse Shopping
Help your children understand the importance of delaying gratification by teaching them to save up for what they want rather than buy things impulsively. This will help them develop patience and self-control, which are important skills for financial success.
A great opportunity for teaching kids about money and impulse shopping is to take them food shopping. Taking your child food shopping is a wonderful way to talk about how to avoid impulsive shopping and show them opportunities for saving choices.
17. Teach Your Children About Donating
Encourage your children to give back to their community by donating a portion of their savings to a charitable cause. This will help them develop a sense of social responsibility and gratitude for what they have.
18. Celebrate Financial Milestones
Celebrating financial milestones is an important way to encourage and motivate children to save. Plan a fun family outing to celebrate your child's financial milestone. This could be a trip to the zoo, a picnic in the park, or a visit to a local museum. Spending time together as a family is a great way to show your child how much you value their hard work.
19. Create a Tradition
Create a tradition around your child's financial milestones. For example, you could take a family photo every time your child reaches a savings goal, or create a special savings jar that you decorate together. This can help make saving money a fun and memorable experience.
20. Educate Your Children on Compound Interest
Teach your children about compound interest and how it can help their savings grow over time. This will help them understand the importance of saving early and regularly.
21. Help Them Open a Savings Account
Help your children open a savings account and teach them how to manage this type of bank account. This will help them understand the basics of banking and develop good savings habits. You can teach your child to put a portion of their earnings into their savings account, whether their income comes from odd jobs, babysitting or an allowance.
22. Talk About Avoiding Debt
Teach your children to avoid debt and only borrow money when necessary. Discuss the importance of paying off debt and avoiding high-interest credit cards.
Giving Your Children a Financial Headstart
Teaching children to save money early is an important way to help them develop good money habits and financial responsibility. In addition to these ways, parents can use games, books, and online resources to teach financial skills, celebrate financial milestones, and involve their children in family financial decisions.
With these methods, children can develop strong financial skills and habits that will serve them well. Remember, teaching your children to save money early is an investment in their future financial health and success. If you're looking to learn more or brush up on your own healthy money habits, check out our blog!