According to a study, in 2021, kids between 4 and 14 were given an average weekly allowance of $9.35. That’s around $486 annually, which is not bad considering they are too young to even join the workforce.
However, there’s even better news: the report revealed the average kid saves at least 48% of their weekly allowance. While they don’t have similar financial obligations as adults, the savings rate is a good indicator of the next generation’s financial fitness.
If you have successfully instilled strong money management habits early on, your kids are better equipped to conquer financial challenges as they get closer to adulthood. While kids learn basic financial literacy at school, it is the parents’ responsibility to guide their kids on how to apply those lessons in the real world.
Thankfully, you now have access to innovative tools that will teach kids the value of hard work and get them excited about saving. For instance, BusyKid’s Debit Card for Kids can be a highly effective tool that can help them learn and practice proper money management.
Paired with the BusyKid Chores and Allowance App, the app can also provide kids with the opportunity to practice responsible spending so they can become proficient at handling their finances later on. Amazingly, the BusyKid app only takes a few minutes to download and set up. It is also conveniently available on Google Play and the Apple App Store.
Getting Kids Excited About Saving Money
While teaching kids about saving money can seem like a daunting task, it is a crucial parenting step that can help set them up for long-term financial success. Below are five easy ways to get your kids excited about saving:
1. Make Saving Fun
Kids love to have fun, so they are more receptive if you make the process enjoyable and interactive. For starters, you can download a kids chore app so they can earn, save, and easily
track their money. You can also print out savings charts that highlight significant financial milestones.
If you want to provide some extra motivation, you can also match the amount they have earned or saved monthly. As soon as they have hit their savings goal, celebrate the milestone with them! Throw a party or offer some reward. The positive reinforcement will get them excited about saving and setting new financial goals.
2. Compensate Them Accordingly
When teaching financial literacy, earning is one of the key concepts you should not overlook. Use a chore app to assign weekly chores they can complete. Completing the work you have assigned and compensating them accordingly will give them a sense of accomplishment and teach them the value of money.
At the start of each week, assign new chores and make sure all their responsibilities and tasks for the week are clear. At the end of the week, check the chores that have been completed and compensate them accordingly. It is also a great idea to help them plan ahead so they can earn the amount they want to target weekly.
3. Implement a Savings-Incentive Program
Get your kids excited about saving by giving an incentive each time they save part of their allowance. It would be best to limit the incentive to money saved past their allowance period. You can give a $0.50 or $1.00 incentive for each dollar left at the next allowance rollout.
Depending on how strong the child’s instant gratification muscle is, you can offer a weekly, bi-weekly, or a full-month incentive. Ideally, you should opt for one that is a stretch. However, you also need to make sure that it is within the realm of their ability.
4. Write Out Goals
Helping them write down savings goals with specific timelines can help them better understand the concept of short and long-term financial goals and objectives. It is also an effective way of teaching them to be organized. It can also be used as an effective gateway into the budgeting world.
Once they achieve their goals, they can become more confident about managing their money. Just ensure they create realistic goals that can be achieved in a few weeks or a month. They might get bored (or give up) when a goal takes too long to achieve. For instance, when starting out, have them aim for a new toy rather than a new bike.
5. Help Them Create a Budget
Helping your kids create a budget will give them a realistic idea of what they can afford and how they can save money. It will also help them understand the value of money. While the process is not the same as creating an adult budget, it can help them keep track of two essentials: spending and saving.
You can also use the process to point out if they are spending too much on toys or candy and not putting enough into saving. With some discipline and your guidance, they will eventually learn how to stick to their budget. You can also reward them each time they achieve their savings goals or achieve financial milestones.
Over to You
Lastly, if you want to instill effective and healthy savings and financial habits, one of the best things you can do is set a good example. Let your child see you budget, save, and reach your own financial goals. You can also take them when you go to the bank or when you pay the bills. Getting them involved will encourage them to make savings an integral part of their adult life.