How to Encourage Your Kids to Save Money

Encouraging kids to save money is an important thing parents should consider in their parenting plan. Although, it is not easy to make your kids learn all the money saving techniques, you can at least teach them few basic things that can make them disciplined money savers. The earlier you start, the better off they will be in saving and managing their finances.

Money management from young age is very important Unfortunately, money management is not taught in schools and colleges. As a parent, it is your responsibility to teach your kids about how to manage money, how to save it and how to spend it. Start teaching money management skills when your child reaches 5 or 6 years.

Majority of kids grow up without having knowledge on money management, saving and investing. Hence, these kids when they become adults start buying unnecessary stuff and become financially unstable- they are more like to get into debt. So, it is necessary that your child's upbringing is done in the right manner, giving right knowledge about money.

Let your kid start saving in piggy bank Start teaching your kid to save money in piggy bank when he is 3-4 years old. This is one of the easiest ways to teach kids about saving money. Give small amount of money regularly to your kid and make him save regularly. This inculcates the habit of saving money. Also, kids enjoy saving money in their own piggy banks.

Set goals Teach your child to set goals for saving. For instance, if your child wants to buy a video game, toy or a bicycle, you ask him to save money that he gets from you/your spouse or any other family member and buy it on his own.

Reward kids with non-monetary things Consider rewarding your kid for saving money. Much like shopping stores that offer coupons and prizes, you can offer prizes to your child. For instance, if your child doesn't spend his saved amount for certain amount of time, offer him a small reward or treat. Praise him so that he is motivated to save money in future too.

Teach the importance As your kids are growing into teenagers, teach them about the value of money. It is necessary for them to know the importance of saving and spending money wisely. Later, tell them the reason behind parents going to work. They have to understand that you have to pay money for food, school fees, monthly bills, etc. Take your child with you while you are going to shop for groceries, pay for monthly bills, etc. Let them know that you have prepared budget for expenses and you will spend within that limit.

Saving money needs discipline and motivation. Being able to save money is an important life skill, which the parents should compulsorily teach their kids. Money management cannot be learned in a day or two. It is a lifelong process. You need to guide your kids on money matters till they are mature enough to take their own decisions.

Personal finance refers to the financial decisions which an individual or a family unit is required to make in order to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

In this article, we shall examine the basic rules of Personal Finance that will guide in making financial decisions.

Live Below Your Income

This is the most important rule of all. Any person desirous of achieving financial success must develop a culture of spending less than he earns. This can be achieved by working on either sides of income and expenditure. Either we work to increase our income or we work to reduce our expenses or both. As we work hard on either spending less or earning more, our disposable income will increase. In turn, the later will accelerate our ability to achieve our financial dreams.

Enhance Your Income

As noted above, it is important that we work hard at enhancing our income as a strategy for increasing our disposable income. As people who are working hard at achieving a financially stable life, we must have a clear strategy of improving our income in the short and the long term.

Above can be achieved through getting a better education, establishing streams of passive income, starting a side business, working hard at our current job and other related efforts. As we move from one stage in life to another, our financial obligations will increase. Therefore, it is important that we towards increasing our income in the same progression.

Live a Frugal Lifestyle

Like many other rules in Personal Finance, this rule derives from the rule of living below your income. Not that we really have much choice about living below our income but in credit driven economies, it is very easy for our personal finance to get out of control as a result of borrowings.

Living a frugal life does not mean living a miserable life. Instead, it means living within your means thereby ensuring that you are in control of your finances and not the creditors. It is a deliberate and conscious effort to live within your income with a view to creating an enabling environment for wealth accumulation. A frugal lifestyle enables us to go beyond immediate gratification to having the big picture in mind.

This habit urges us to save as much as possible without making ourselves miserable. It enables us to avoid regrettable expenditures by applying the ten seconds rule. This rule says that every time we want to make a purchase, we should spend ten seconds to ask ourselves if we really need what we are about to purchase. Very often, this simple rule will point us in the direction of spending less money.

Learning to Manage Money

Having gone through the above steps, it is very likely that you will begin to have an excess of income over expenditure. The savings so accumulated is your ticket to financial freedom. At this point, you must learn to channel the excess funds into profitable investments. Money begins to work for you and not against you. As this stage, you must also begin to know the difference between asset and liability. Invest more in assets and pay off your liabilities.

Be in Control

Personal Finance is not about being rich, it is about being free. Freedom from debt. Freedom from stress and worries. It's about being in control of your finances. And so, the final rule is be in control.

In conclusion, most people spend most of their lives earning money but rarely spend enough time planning the efficient use of same. This leads to a lot of financial regrets. The result is that at age 65, most people are flat broke.

It is therefore very important that we take the issue of Personal Finance very seriously. Our financial well-being is worth some time and effort. If we observe the above rules, it would lead to fuller and happier life.

The Rules Of Personal Finance

Personal finance refers to the financial decisions which an individual or a family unit is required to make in order to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

In this article, we shall examine the basic rules of Personal Finance that will guide in making financial decisions.

Live Below Your Income

This is the most important rule of all. Any person desirous of achieving financial success must develop a culture of spending less than he earns. This can be achieved by working on either sides of income and expenditure. Either we work to increase our income or we work to reduce our expenses or both. As we work hard on either spending less or earning more, our disposable income will increase. In turn, the later will accelerate our ability to achieve our financial dreams.

Enhance Your Income

As noted above, it is important that we work hard at enhancing our income as a strategy for increasing our disposable income. As people who are working hard at achieving a financially stable life, we must have a clear strategy of improving our income in the short and the long term.

Above can be achieved through getting a better education, establishing streams of passive income, starting a side business, working hard at our current job and other related efforts. As we move from one stage in life to another, our financial obligations will increase. Therefore, it is important that we towards increasing our income in the same progression.

Live a Frugal Lifestyle

Like many other rules in Personal Finance, this rule derives from the rule of living below your income. Not that we really have much choice about living below our income but in credit driven economies, it is very easy for our personal finance to get out of control as a result of borrowings.

Living a frugal life does not mean living a miserable life. Instead, it means living within your means thereby ensuring that you are in control of your finances and not the creditors. It is a deliberate and conscious effort to live within your income with a view to creating an enabling environment for wealth accumulation. A frugal lifestyle enables us to go beyond immediate gratification to having the big picture in mind.

This habit urges us to save as much as possible without making ourselves miserable. It enables us to avoid regrettable expenditures by applying the ten seconds rule. This rule says that every time we want to make a purchase, we should spend ten seconds to ask ourselves if we really need what we are about to purchase. Very often, this simple rule will point us in the direction of spending less money.

Learning to Manage Money

Having gone through the above steps, it is very likely that you will begin to have an excess of income over expenditure. The savings so accumulated is your ticket to financial freedom. At this point, you must learn to channel the excess funds into profitable investments. Money begins to work for you and not against you. As this stage, you must also begin to know the difference between asset and liability. Invest more in assets and pay off your liabilities.

Be in Control

Personal Finance is not about being rich, it is about being free. Freedom from debt. Freedom from stress and worries. It's about being in control of your finances. And so, the final rule is be in control.

In conclusion, most people spend most of their lives earning money but rarely spend enough time planning the efficient use of same. This leads to a lot of financial regrets. The result is that at age 65, most people are flat broke.

It is therefore very important that we take the issue of Personal Finance very seriously. Our financial well-being is worth some time and effort. If we observe the above rules, it would lead to fuller and happier life.