Piggy Banking: Helping Your Child Understand Savings

Contrary to popular the belief of children, money does not grow on trees. Children have no concept of how money is made or earned until you, as their parent teaches them. Education is the key to wealth building, and it can start very young. We, as parents, set an example of how money should be spent, saved, and managed. Children do not understand where money comes from but they learn from a young age they can use it to buy things they want. An opportunity to teach can start out as simply as pushing a grocery cart through the store and the child wants a bite of something. You can advise the child that you have to pay for the item before eating it. The child will develop the most basic understanding of using money to purchase goods. The following will offer some advice and tips on how to incorporate concepts of earning money and savings for your child.

Regulate a Steady Allowance for Your Child

No matter how small the contribution of allowance may be the lesson learned is the most important part of offering an allowance. Setting an amount for an allowance is commonly 50 cents to one dollar for each year of age for your child. Be sure to set a weekly or biweekly schedule that your child will earn the money on. Keeping the payment of the same day each week can provide some sense of security for the child. Be sure to set parameters on what you expect the money to be spent on and how much should go to savings.

Teach Your Child About Saving

After offering an allowance make clear how much money you expect to be put towards savings from your child. It is important for a child to understand that saving money is beneficial. Children may look at savings as a waste of money when they want the hottest new toy and that fifteen dollars going towards savings could be used on the toy. Helping a child understand the difference between wants and need and how saving money will add up in the long run is critical. Don't expect a younger child to set long-term financial goals. Setting up weekly financial goals and plans will work best as children may become bored from what may seem like a never ending savings black hole.

Your Role in Your Child's Savings

Save your loose change and contribute to your child's savings on a weekly basis. The amount of change we collect as adults adds up fairly quickly. Once that dollar is spent and the remaining amount is considered change we have a tendency not to think of it as cash anymore. Put the loose change in your child's bank and you'll never miss it. You may also choose to have a set amount transferred to your child's bank account from each pay period. You can also teach your child at this stage that a portion or all of any birthday or special occasion money they may receive will go directly to savings. This will teach your child budgeting with the money that he or she already has, and the importance of setting "extra" or unexpected funds back for savings.

Saving "Free" Money for College by Shopping

I signed up for a website when I found out I was pregnant with my daughter to begin saving for her college. It's never too soon to start saving for your child's college education. You can't beat earning free cash just by making purchases that you normally would! The website www.upromise.com offers a way to earn college savings through eligible everyday spending, start a college savings plan, save money on taxes, learn about ways to pay for college, and offers special discounts, bonuses and money-saving offers. Signing up is fairly simple and inviting family and friends can add to your savings. Every little bit helps! I would say check out the website to see if it might be beneficial for your family.

Good luck on your savings journey!