One of the most important of life skills is being able to save money. Without having this skill secured, your child is looking at an adulthood filled with anxiety and stress over how they will pay their rent, buy food or get a loan for a house. While it may feel like it goes against our natural inclination to spend, sowing the seeds of money savings isn’t hard but it does take patience and time.
- Allow them to Earn their Own Money
Starting at about 6 or 7, give your child the opportunity to earn their own money. This might look like picking up their play room, setting the table, feeding the cat for an allowance that they will put inside a jar. As the child gets older, increase the difficulty level of the jobs (mowing lawns, raking leaves, grocery shopping, etc.) while also increasing the amount of allowance. Provide opportunities for them to earn additional money through ‘extra credit’ work.
- Track Spending Together
It’s one thing to earn the money, it’s quite another to know where it’s all being spent! Tracking can be done on the computer in a workspace or on a piece of paper. Talk about what they’ve purchased, write it down along with the cost, and sum up at the end of every week how much is left. Soon, they’ll be able to spot patterns they should be able to break if they are losing track of their savings goals. - Give them Savings Incentives
Everyone likes to know when they’re doing a good job, and your child is no different. If they have set a savings goal of $500 for a specific item (like a computer or a bike) when they have finally met that goal, give them a savings incentive such as a gift card to tell them, “Job well done!” - Be the Example They Need
If you want your child to emulate good savings behavior, they will need to see that coming from you, too. When shopping, let them see that you’d like to purchase an item but you’re holding back because it isn’t within your budget. Then, after a period of time when you’ve saved enough, have them join you when you make the purchase. - Have a Money Conversation
Most people don’t feel like they have a secure handle on their savings and expenditures. This makes it difficult for them to talk to their kids about finances. However, talking regularly with them about questions they might have, where their money has been going, and how much they have saved will empower them toward more financial growth and help them gain confidence in their decisions. - Be Their Creditor
Every once in a while, your child will see something that they absolutely must have. This provides a great opportunity for them to learn about credit, with you as their creditor. Let’s say the item is $100. You offer to loan them $100 but with interest added to it. Sit down and determine together how long it will take for them to pay you back, and how much interest will accrue on the original $100. They can then decide if they feel the item is still worth it! - Be Patient with Their Mistakes
Putting kids in charge of their own financial decisions will, at one time or another, create a whopping mistake. However, mistakes are how we all learn so the mistake itself is not inherently bad. Sit with them and talk about how to do better next time, and they will be sure to remember the lesson when a similar situation happens again.
- Give them a Place to Save
Of course, when your child is earning and saving all of this money, they are going to need a place to put it. When they are young, use a clear jar so they can see the bills and coins piling up. When they get a little older, help them start a savings account or possibly a child-friendly debit card. There are apps like Greenlight that notify parents when your child makes a purchase plus allowing for easy allowance deposits. - Have the Wants vs. Needs Discussion
When you’re a kid, every want is a need, so it’s important to talk about the line that separates the two. Needs are things such as food, health care, housing, basic clothing, and shelter. Wants are things like bikes, designer clothes, the newest smartphone, etc.
Giving your kids the right tools to make their own financial choices, the space to fail and the patience to learn from those mistakes will put them on a clear path toward positive money saving attitudes for their future.
