Sep 28 , 2022
There is no denying that saving is a priority. Money creates opportunities for our future selves, we save for a rainy day, sunny days and to change the forecast. Saving is a fundamental or foundational value to being financially responsible. And it's a must that we teach it to kids.
There are a lot of people out there that are going to say "hey, we need to do less teaching about saving and more teaching about investing." But it's important when you're teaching kids, in order to help them understand, you have to provide building blocks.
Think about when you're learning math. You don't just start off teaching kids about multiplication, you teach them addition, and then addition leads to multiplication. You wouldn't start out teaching division. First, you start off teaching subtraction, then subtraction builds up to division. It's the same when it comes to saving. Saving is to investing what addition is to multiplication, what subtraction is to division, it is a building block.
When kids understand the process of setting aside money that they've earned for later, it's really easy for them to adjust the place where they're saving the money. The difference between saving and investing is where you're putting the money. When we think about saving, we think about putting it into savings accounts. Which historically doesn't pay any type of interest. Those accounts are a safe spaces for our money when we may need it for an emergency or a large purchase in the short term.
In terms of building wealth, wealth is not built through saving. Wealth is actually built through investing. When we invest money that we've set aside, that means that we're putting money into things like starting businesses, stocks, cryptocurrency or real estate. Those are opportunities where our money can earn a significant interest, our money can appreciate significantly and lead to us building wealth for our families.
However, we can't get to the place where we're investing in real estate or starting businesses, if we don't first understand the importance of setting aside some of our money that we've earned today, for later. And that habit, that practice, is saving.
At Super Money Kids, we teach that "we save for rainy days, sunny days, and to change the forecast." Rainy Days are our emergencies. These are unexpected expenses when your car breaks down, or somebody has to go to an emergency room. Our sunny days are our future goals. These are the things that we want to do in the future or the people that we want to be in the future. We set aside money for those things. We save money for those things. Changing the forecast is where we mention or introduce the idea of investing to our young people when we're talking about saving. Changing the forecast is when you have saved money and you have invested money or you have built wealth. At this point when you want to "change the forecast" you can simply book a plane ticket and travel anywhere in the world or get a good gift for your family.
This is why we teach saving to our Super Money Kids. This is how we teach saving and this is how saving builds up to the idea of investing. If you are interested in getting started with teaching your kids more about finances, learn more about our Super Money Kids at Home Digital Program and get a free ebook today!