7 tips for teaching kids to be savvy savers and spenders
In a world where most things are a tap or a click away, teaching your kids to hold off and save for what they want can be a challenge. Hopefully the tips you have learned so far will prepare everyone for this part. Learning about good saving behaviour and the importance and power of saving is one of the most important lessons in this series. Savings goals get bigger and harder the older you get, but the fundamentals are the same – consistency and time.
Here are 7 practical tips to help you guide them on the right path.
Savvy ways to save
1.Embrace hand-me-downs and clothes swaps
In the age of ‘boho’ and ‘vintage’, everything old is new again! So why not encourage your kids to embrace hand-me-downs from family and friends or organise clothes swaps as they outgrow their threads. Plus it’s both eco-friendly and budget-friendly.
2. One person’s trash is another person’s treasure
While you’re on the second-hand bandwagon, why not show your kids the value and adventure of the bargain hunt at the local thrift shop. It’s a chance to discover quality items at a lower price and promotes sustainable consumer choices too.
3. Discover the joy of toy libraries
Kids grow out of toys fast. So rather than buying, it could pay to discover your local toy library. They’re not only a more sustainable option but also teach kids about borrowing and returning. You could also treat it as a try-before-you-buy because if they love it, you can always buy it!
To find a library in your area, check out Toy Libraries Australia.
Smarter ways to spend
4. Avoid impulse buying
Drawing on inspo from the last lesson on budgeting, talk to your child about the impact short term wants and impulse buying have on their goal. Having a conversation about what it will mean to their budget or perhaps the impact on their overall goal, will help them make a more informed decision about whatever item they want to purchase on impulse.
5. Online spending awareness
Your kid’s safety is paramount, so it pays to be vigilant when spending online. Remind them that nothing’s truly free online and too good to be true, usually is. Fakes of common brands as well as poor quality items dressed up in fancy photography or slick videos are a common pitfall. Scammers and those wanting to gain access to your device or bank details are another watch item. Younger children should be encouraged to seek permission before making online purchases. Older children should familiarise themselves with resources available to help protect themselves online. In the event of a scam or fraud, time is of the essence. Make contact with your bank as soon as the fraud becomes known.
6. Practice makes perfect
It might sound old fashioned but working towards a goal still has its rewards. Help them understand that waiting and planning for something can be more fulfilling than immediate purchases. It helps with budgeting and reduces the possibility of getting into bad debt. This lesson builds self-control and patience and goes hand in hand with a lifetime of good financial decisions.
7. Introducing the 8th wonder of the world – compound interest
Explain to your kids what it means to invest long term and introduce them to the concept of compound interest. Think of compound interest as a snowball rolling down a hill. It starts small with the initial money you put in. Then two things happen, the first is that your money begins to earn interest – your money is earning money. The second thing (and why it is called the 8th wonder of the world) is your interest starts earning interest as well – snowballing your money and growing your savings more and more.
To see this in real life you could consider opening a savings account for them so they can take advantage of compound interest and the benefits of regular deposits.
More fun ways to learn
Here’s some more ideas for teaching kids and teens about money.
- DIY piggy banks. Get creative with your kids by making piggy banks using items found around the home. For inspo, check out these cool ideas.
- Power of interest challenge. Use a savings calculator to show how interest works, then challenge your kids to set a goal and use the calculator to see how regular deposits make a difference over time.
- Price check quiz. Create cards with different items to see if your kids can correctly guess the cost of their favourite things – it can be both fun and educational.
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