Recently the fall of our economy has shown us how important it is to save money and spend it wisely without borrowing or using credit cards. Now is a great time to share that wisdom with our children.
Don't make the same mistake that many parents make early on when they buy their children something every time they go to the store. This confuses many kids because they are not being taught to understand the concept of how money is earned.
There are many ways to teach your child to have healthy saving habits. The earlier you start the better. You can teach your child to have strong saving habits by helping them to make smart purchasing decisions and letting them know they can't always immediately get what they want. In the long run, this will teach them to avoid accumulating debt.
The best time to start teaching your child about money is when he/she starts noticing it. Getting a piggy bank for them to put their money in is a great way to start. They will see it grow as they add money. When they have saved enough money to buy something they really want, then count it out together and have fun shopping. A great way to teach them the concept of earning a dollar is by giving them an allowance for chores in and around the home. Some examples are taking out the trash, washing the dishes, doing the laundry, washing the family car, helping in the garden, cutting the grass, etc.
Once your kids have earned $20 or more, take a trip to the bank and let them open a savings account. Most banks will let children open a savings account for free. It will take some time for their money to grow, so make sure your child receives a passbook so they can watch the progress of their savings and efforts.
After your child has been banking for a while, you can begin to teach them investing. Check into different investment plans with your child such as money market accounts, money cd's, etc. to see which one you think will be better over long-term investing. Over time the money will grow and the next thing you know you'll be car shopping, or maybe your child will want to help pay their own college tuition. A few more years later and they'll be ready to buy their first home.
Teaching your child the importance of saving money will benefit them for a lifetime and as an added bonus for you, they're less likely to move back home for you to support them.