This will remind them of their goal and give you both the chance to celebrate progress. For example, a jar in the living room or a paper chain that you cut pieces off of for each milestone. Once they’ve set a goal, create a clear way for them to track their progress. Let them discover for themselves that not all goals are worth the time and effort it takes to reach them. Children's goals vary a ton based on their age, but might include toys, sports equipment, electronic devices, special clothes, or other big-ticket items. As an incentive to focus on saving, consider making a matching contribution by adding 50 cents for every dollar your child saves.Ĭreate a Savings Goal: Help your child set a saving goal. They may choose to save a regular percentage of their income or a certain amount each month. When it comes to the actual act of saving, teach that creating (and sticking to) goals is key. In order to do that, they need to recognize the difference between dumping money into an abstract savings fund and saving with a purpose. It’s important for children to understand that saving is the secret to getting what they want. You may even offer a reward if your child is able to meet a goal you agree on. Did they spend more than they expected? Less? What would they like to change? Help them create a target for the next period and suggest ways they can improve. At the end of the tracking period, have them evaluate all of their choices. They can do it on a piece of paper, a spreadsheet, or even an app. The point isn’t what they're buying, but that the child recognizes that they can’t get everything-they’ll have to prioritize what they want most.Įxpense Tracking: For older kids, help them track all of their spending for a week or month. These items can be small toys, treats, or even “coupons” for extra time playing games or a movie night. The store could include one item that will cost the whole $5, a few between $2 and $3, and multiple small things for $1 or less. Give your child some money (maybe $5) and set up a small, at-home store. Spending Simulation: For younger kids, you can simulate the experience of spending to teach them about tradeoffs. They shouldn’t expect to get it right the first time. It’s important to acknowledge that budgeting always involves making adjustments. They must plan ahead so that they can afford everything they need, and this is why a budget is a necessity. Children need to recognize that purchases cost money and that money is in limited supply-they can’t just buy everything they want. SpendingĪn understanding of spending, including the ability to budget for and track it, is perhaps the most essential money skill you can teach to a child. It’s essential to teach children how to manage the money they have and invest for the future while they are still young.
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