National Teach Children to Save Day is upon us. April 11th has been set aside to encourage our children to save money. Why is that important? Did you know that the average American has enough money in savings to last them one month – and that is if no emergencies come up such as car repairs! So the question is if you were to loose every source of income you have next week, how long could you pay your bills? Do you want your children to live that way too?
So how do you teach a child to save, especially in a world where instant gratification is the norm? If you own your business, hiring your child is one of the best ways to save on taxes. It is also one of the easiest ways to teach them to save because anyone with earned income can have a IRA account – that means a portion of their income can go directly to an IRA account that can be used for college or even as a down payment for their first house.
Other ways are the old fashioned penny bank – you know the one you used to have, that one of your grandparents gave to you. The ones that have to be broke to get into may be a little extreme, but it can start your child on a journey they will continue for the rest of their life. By starting to put a portion of their allowance in a place they can see but not touch (and it gets heavier every time you put money in) can ensure that they can buy their first car by the time they turn 16.
The real way to teach children to save is by showing them that you are also saving money – you know, by example. Let them see when you put money in your saving account or a retirement account – show them the broker statements and how much it has increased each month. Even if it decreased, they need to see that so they can make wise decisions with their money, too.
Put in the comments the ways you have taught your children or how your parents taught you to save money.