Teaching kids the value of a dollar isn’t always easy. The latest electronic gadgets beckon, and money from allowances and birthdays seems like it is spent almost as soon as it is received. Even many adults would rather get instant gratification from their money than tuck away a few bucks for a rainy day. But teaching children the importance of saving and investing is crucial if you want them to be able to effectively manage their money later in life. Learning about money doesn’t have to be a chore for kids, nor does it have to be a battle for parents. Use these three creative ways to teach your kids good saving and spending habits, and have a little bit of fun along the way.
1. Upgrade to a piggy bank for the 21st century.
Forget about dropping a few coins through a slot and watching them disappear forever. Kids will grasp finances better if they can actually see their money and understand what it will be spent on, which is why companies like Money Savvy Generation offer translucent piggy banks with four individual slots. The Money Savvy Pig’s slots are clearly labeled for the purposes of saving, spending, donating and investing. Show your kids that a portion of their money should be saved, some should be donated to help others, some should be invested so it can grow, and a little bit can be set aside for enjoying now. Instead of trying to convince your children to put all of their money away and out of sight, let them watch their money add up.
2. Open a bank account with your child.
More and more financial institutions want to promote financial literacy, which is why they offer checking accounts especially for children. You can ask your bank or credit union to see if they offer savings account just for kids. Benefits can include prizes, online educational resources and incentives for saving. Opening a bank account with your kids gives them the chance to learn about deposits and withdrawals, how to balance a checkbook and how to review monthly statements. Before setting up the account, talk with your children about why they are saving money. Do they have a big purchase they would like to make or a school trip they would like to take? Having a reason for saving can make it that much easier for kids to make faithful contributions to their accounts.
3. Invest in the (virtual) stock market.
If your kids are past the age of piggy banks, consider giving them a glimpse of the stock market. Rather than investing real money, though, you can invest in virtual stock markets. Investopedia offers a free online stock market simulator that allows you to invest with virtual money. That way, parents can teach tweens and teens about the thrilling highs – and the devastating lows – of the stock market without spending a penny.