Teaching Your Child to Save Can Be Fun
By David Dierking
“I want (fill in the blank)!”
If you’re a parent to young children, you’ve undoubtedly heard your little one utter this phrase many times. Plus, it probably most often occurs at some pretty crowded locales such as the grocery store or Toys ‘R Us where the level of parental shame can be at its highest. At such a young age, kids really only have a comprehension of what they want and not what it takes to earn what they want.
But that doesn’t have to be the case. Studies have shown that our schools are doing a woefully inadequate job of preparing our young people to be financially wise in their later lives so it’s increasingly on the shoulders of parents to teach their kids fiscal responsibility.
With a few simple tools and a little preparation, you too can turn your avid spenders into eager savers. Here are a few ideas that will get you headed down the right track.
Start with an Allowance
Kids won’t have a good idea of what to do with money unless they have some so start them with a small weekly or monthly allowance. Birthdays and holidays provide chances for a quick windfall but an allowance will help them understand how to manage a regular “income”.
Show Your Kids How You Do It
Now that your child has an income stream of their own, don’t hesitate to show them what you do with yours. Explain to them that while you get paid a lot of money (in their eyes, at least), you have to use some of that money to pay for the house, food, clothes, etc. You can use the concept on them in that if they want something like a toy or a shirt they need to use some of their money to pay for it.
Give Spending Money ahead of Time
How many times have you walked into a grocery store to find your little one eying up a candy bar at the checkout aisle and want it? Kids don’t understand the value of something if they’re simply able to get it when they ask for it. Instead, give them a dollar or two at the beginning of the shopping trip and tell them they can spend it on whatever they want but that will be the only money they get. You’ll be surprised at how carefully they evaluate if that candy bar is really worth it. (And, yes, let them choose whatever they want to buy. Put your child in charge of the transaction and see how they react.)
Reward Their Savings
You have a 401(k) that rewards you (hopefully) with a matching contribution for the amount you save. Why not use the same idea for your kid? For every dollar of their allowance they choose to save, match it with an additional dollar. As your child gets older, you can pare back on the matching contribution you give them as they begin earning their own money and become more independent. Which brings us to….
Encourage Them to Get a Part Time Job
Your child will soon reach an age where they need to begin to help providing for themselves. If they want a car or an Xbox or anything else, have them save for it so they can at least pay for a good chunk of it themselves. Anything that they pay for with their own money you’ll find them taking a little better care of. Plus, it teaches them the value of working hard to achieve a goal.
Teaching your child the value of saving versus spending can actually become a fun process. Instead of worrying about trying to head off an argument in the checkout aisle, you can give your child the tools to help them determine for themselves how valuable something is. By encouraging certain behaviors, you can help them learn to separate what they want from what they REALLY want.
And those lessons can last years and years.
Photo credit: arecknor
This article was originally written or modified on . If you enjoyed reading this post, please consider subscribing to my full RSS feed. Or you can also choose to have free daily updates delivered right to your inbox.