Learning to save is probably the most important thing you can teach your child about money. It not only teaches them to put something away for a ‘rainy day’ but it also encourages children to save for an expensive item instead of buying it on credit.
There is only one way to save – spend less than you earn. It sounds simple, but so many people find it impossible to save. Does the phrase ‘If only I earned more, then I would be able to save’ sound familiar? The problem is not that we don’t earn enough, but rather that we have gotten into a habit of spending everything we earn.
2. Separate Wants from Needs
The reality is that no one can have everything they want, which is not a bad thing. By not buying everything you want you learn to enjoy the things you already have and you also learn to have fun without spending money. Your children will not have a horrible childhood if they don’t get all the latest toys when they hit the shelves. The truth is that there is so much that one can do without spending money.
3. Share and Serve
You may have heard the phrase: “Money is the root of all evil”. The truth is that it is not money but the love of money that can cause so much harm. Teaching your children to respect but not worship money will help them in the future. Provide opportunities for your children to share what they have and to serve those who are less fortunate. It will also help them to appreciate what they have!
4. Money does not bring happiness
Although having enough for your needs does bring a sense of peace into your life, it will not make you happy if you do not appreciate what you do have, including those things that “cannot be measured in gold”.
Teach your children to count their blessings, both monetary and non-monetary. Many things to be thankful for have nothing to do with money – friends, family, nature and their health. Remind them of what they do have and encourage them to be thankful for everything.
5. Don’t borrow money unless you can pay it back
In fact, don’t borrow money at all unless you are buying a large asset (you can explain to your children what an asset is).
Credit is here to stay and at some point your children might find a credit card in their hands. So, although the first option is SAVE, we need to teach our children how to use credit wisely.
If your children wish to buy something that they have not saved up for, buy it for them and then take out the money they owe you from their pocket money each week (include interest). Show them as you are doing it. This will get them into the habit of paying their debts and will show them that credit is not ‘free’ money.