I’ll break the ideas up into three groups based on age.
At an Early Age
From a very young age, children can learn about money and why saving is important. Talia received her first piggy bank at a baby shower just after she was born, and that was the start of her financial learning! As soon as she knew what money was and received a little bit of it, we taught her about keeping it in her piggy bank and saving it for future use.
Spend or Save
Saving is a good first step, but the lesson becomes even clearer through experience when your child wants to buy something! We’ve tried to teach our kids that it’s not always wise to spend money right after you receive it or just because you have it. Talia learned this lesson when she spent all of her money (fun at the time!) at the market, and soon found she no longer had any money and had to wait until she had saved up again before she could make another purchase. I think experiences like that are instrumental to their learning, because they will really remember how things work when they have had a chance to experience it for themselves.
Save with a Goal
Another good learning experience is saving up for a specific item. When we were preparing for our trip to Florida, Ken’s mom told the girls they could earn money by helping her with some things at her house. They wanted some extra spending money at Disney World for themselves, so they were able to work with an end goal in mind. They were very interested in pin trading at the park, so they each purchased some and the pins they came home with are treasured mementos from our trip!
Another way to save with a goal in mind is to create a bank for a family goal (such as a family trip to Disney World). This is a great reminder to the kids that it takes time and effort to save enough money for something like that!
You can give your kids the opportunity to earn money by providing an allowance or allowing them to earn money by doing extra chores that they are not usually required to do.
Open An Account
When your child is old enough, you can take them to the bank to start their own bank account. I still remember doing this with my dad. I remember choosing my PIN number and getting my own bank book. It felt so grown-up to use the bank machine for my very own account!
Have your child help you make a grocery list and help them be aware of the cost of things by looking at flyers and prices at the store and sharing the budget with them. This way, they can work with you to figure out what to buy that fits within the budget. It’s a good way to help familiarize them with the cost of things. You can do this with younger kids by telling them they can each choose a special treat at the grocery store, but must remain within a certain dollar amount.
Real World Experiences
Another way to help familiarize them with cost is to share what things are costing (e.g.. bills, eating at home vs. a restaurant, gasoline for the car, etc.). I remember the moment our girls realized that it cost money to drive somewhere! We were surprised to realize they hadn’t thought about it. It might be a good thing to point out next time you’re filling up the gas tank! Our kids like to help at the gas pump; if your kids are the same, you could make a point of keeping them there with you while you’re paying for the gas too!
Preparing Financially for Future Education Costs
All of this has a lot to do with thinking ahead and being prepared for the future. As you’re talking to your kids about what they want to be when they get older and their dreams for the future, you can also help them understand the role that school plays in making those dreams come true. Teach them about the cost of school, and help them understand how saving for school early can make a big difference when the time comes time to pay for it! When your kids are old enough to understand the concept, teach them about compound interest. I bet they’ll be excited when they realize the benefit of saving with an RESP–that’s the glorious moment when they`ll understand it all enough to thank you for starting one for them back when they were younger!
Disclosure: This post was sponsored by Heritage Education Funds. All opinions shared are my own.