Getting your kids to save money can be a tough sell. But even though being a strong saver is not innate, there are ways of steering your child in that direction.
One way is by you, as their parent, acting as a financial role model in a subtle way. For instance, don’t encourage your young ones to save every penny they get from Grandma and Grandpa. That’s no fun. Instead, help them take a third of the money and put it aside. Encourage them to put it in a savings account you started for them at birth—the one that has slowly been building, and whose worth they are now getting old enough to recognize.
Another way to encourage early savings is by openly talking about money, its value and how to make the most of it. Take your kids with you when you visit Tower and encourage questions.
A more abstract approach is mentioning, for instance, that the family is having lamb instead of hamburger for dinner because the former was “on sale” and is a more frugal choice.
Involve kids in decisions
Everyday experiences are perfect learning opportunities. You can take the grocery store lesson one step further while shopping, by letting your kids have a say in which food items to buy. For extra emphasis, remind them their choices could impact whether or not you can afford to go out to eat at a nice restaurant later in the week. You’re basically teaching them about making a good short-term decision that will have a long-term benefit.
A dash of game playing doesn’t hurt either. For their weekly allowance, provide your children with three separate “accounts.” Show them how to divvy up their bounty between “Savings,” “Sharing (for charity),” and “Spending.” It’s a simple method for even the youngest children to learn self-discipline.
And, to demonstrate how much of an interest you have in what they are doing, offer to match deposits, to a reasonable degree.
Now that they are teens
While the above approach may work well on a youngster, reinforcing it to a teen—who is distracted by smartphones and a myriad of other “must-have” gadgets—takes disciplined savings to a whole new level.
Have your teens practice self-control to avoid making a quick decision to buy something just because they saw it featured on display or on sale. Have them research before they buy so they are sure they are getting a good value, especially with a big purchase.
Ask them to keep track of their spending, which helps them set and stick to limits. Discuss the importance of taking good care of what they buy; it’s expensive to replace things.
Let them take charge
When your teenagers are shopping with you, ask them to be in charge of the money for that day. It will help them get a grip on the cost of items, and learn to make choices about what would be good for themselves and the whole family.
If your teen has a part-time job, getting them to put aside some of the money they earn to save for an item they want is a good way to learn the value of saving.
And even when they are in college, financial acumen can still be taught. Getting a credit card for college can help. However, be sure to discuss with them that if debts start to mount up quickly, it can take a very long time to pay them back. Not taking heed to this can be a hard, but perhaps necessary, lesson.
Resources: MonkeySee, The Federal Deposit Insurance Corporation, TradeKing Advisors, Inc.