From making an imaginary cup of tea to shopping at a make-believe grocery store, children love to mimic their parents' lives through play. So when it comes time to teach your children how to manage their money and save, it's important you lead by example too.
“Once your child starts to understand the basic value of coins and dollars and is able to count, add and subtract, they are ready to explore the world of saving,” says Raymond Chun, a senior vice president at TD Canada Trust. “Instilling financial principles and good saving habits in your children from a young age is important, but don't forget they will learn even more by watching what you do when it comes to managing your money.”
Chun offers his advice on how to lead by example and teach your children solid saving skills:
• Set a goal – Sit down together and make a wish list of all the fun things you could save for. Help your child select one toy from their list and choose an achievable and tangible item of a similar value from your list. Explain to them how much you both will need to save every week to achieve your goals.
• Start saving – Start with piggy banks or jars so your child can see the money growing in front of them. Glue a picture of their goal onto it to get them excited about saving.
• Introduce them to interest – Explain that for every quarter they save, you will add a nickel to reward them for saving their money. This will introduce them to concept that money can be more valuable when you save it in a bank.
• Track their progress – Saving requires time and patience, so help your kids stay interested in saving by tracking their progress. Consider working together to create a colourful countdown calendar to hang on the refrigerator that illustrates your savings goals, and use stickers to track your progress.
• Communicate – Talk openly and honestly about money with your children. Look for teachable moments every day, like depositing money at an ATM, to show your children how you save and manage your money.