The biggest mistake you can make is to assume that your kids will learn to save by themselves once they reach a certain age. Like all other habits, saving is also something that is inculcated in young adults by conscious effort from a young age. They see you saving, they will save. You insist on the importance of saving, they will understand and realise the importance of it as well. The central idea is to make them realise that living pay check to pay check, or pocket-money to pocket-money right now, is not an advisable option and having a backup is extremely necessary.
Read through the following five tips, designed for parents, that will help you a great deal in making your young adults learn how to save effectively;
Lead by Example
Words have to be accompanied with action in order to be effective and bring results. Lead by Example is the embodiment of this rule. No matter how many inspirational lectures regarding the importance of saving you deliver to your children, it is going to be rendered ineffective if your own actions are not supporting it. If you are spend-thrift yourself, it is this habit of yours that will determine the action of your children rather than the words. As such, be an active saver yourself. Show your kids the ways you actually employ to save and fully communicate to them the actual benefits that you have reaped by saving.
Familiarise them with banking; focusing on savings account
The best way you can familiarise your young adults with banking, specifically in context of saving, is to open up a savings account for them and encourage them to deposit their set aside pocket money in that account to ensure that they’re not ending up spending it on some unnecessary thing. They cannot learn in isolation; give them as much exposure to account types and their purposes as possible. The more mainstream you take them in, the better they learn.
Talk to them about major house expenses
What makes young adults unable to learn saving is the fact that they’re not aware of the practical realities functioning in the house such as expenses of varied types, like bills and groceries. One of the very effective ways to teach them saving is to involve them as you sort out bills, set aside the required amount of money of each and talk about it alongside as well. You can even hand over some of the bill sorting responsibility on their shoulders like noting down the amounts and making comparisons from previous months’ bills and expenses.
Keep a family saving jar
Apart from the formal banking methods, you should also keep a little family saving jar inside the house to be filled through the month. As you put in small amounts of money in there on regular intervals, encourage your kids to do this as well. Since this is a collective activity and is being done right inside the house, it will prove to be quite effectual in the long run. It is the small savings that turn out to be most useful when done a long-run basis. This family jar is what teaches young adults the effectiveness of small savings.
Emphasise the importance of needs over wants
This is the cornerstone of teaching saving to young adults. They need to know the difference between both and what it means to not have needs fulfilled as compared to wants. When they know that needs are what drive the daily life and they simply cannot be compromised upon, they will automatically save up the major amount that they spend on wants often purchased on impulse rather than thoughtfully.