Thrifty Thinking: Teaching Children to Save

 It’s never too early to start talking to your young children about money. And the goal-based banking app, Monifi, is the perfect tool to use to start this conversation.

 

Having these small, frequent conversations about money when kids are in elementary school prevents the topic from becoming a scary and uneasy conversation when they are grown.

 

Emily Schwartz, Monifi’s Financial Education Manager is sharing her top tips for teaching your kids about money:

 

>>Practice Spending Finite Money

One of the most important skills needed for budgeting is the ability to take finite income and allocate it in such a way that all needs are met. It’s something kids of all ages can practice long before they have jobs and living expenses. You can find many opportunities to practice this skill. Is it grandma’s birthday? Give children a budget and have them search for something within that budget. Road trip? Give them a souvenir budget that doesn’t magically replenish if they spend it all the first day.

 

>>Model Opportunity Cost

Parents are one of children’s most influential role models when it comes to financial habits. It’s easy to see a parent spend, harder to see a parent save, and nearly impossible to see what a parent didn’t spend. All spending has an opportunity cost. If I spend money on X, that means I’m giving up Y. Model that process for your children. The next time you see something you want to buy, but decide not to, vocalize that process. “I really want to buy this right now, but I’m choosing not to because saving for XYZ is more important.” Kids don’t get to have everything they want, and it’s important to show that adults don’t either.

 

>>Open a bank account

Opening a savings account for your young child helps them take ownership of the saving and spending process in a very real way. It opens the door to conversations about interest, long term savings goals, and keeping money organized. It also gives them a safe place to store any allowance or birthday money in a way they won’t be tempted to spend it impulsively.