Sharing information about how to handle money – including when to save, when to spend, and how best to do both – is one of the most valuable things a parent can teach their children. These money lessons will serve your children well throughout their lives. And the good news is that it’s never too early to start teaching your children how to save. Depending on how old your children are and your parenting style, you may want to embrace one or several of the following tips.
Talk to Them about Money
Many parents avoid having conversations about money with their children because they’re not sure how to go about doing it. But even if you’re not talking to your children about money, they’re still learning something. Your silence might be teaching your kids that money is a topic to be avoided. Or they may be learning their lessons about money from somewhere else, and those may not be the lessons you’d like them to learn. Rather than staying tight-lipped, talk to your children about how you save and spend your money, and teach them how money you save can grow with the help of interest. By learning at a young age how money really works, they’ll be better prepared to make smarter decisions about it when they are older.
Give Them an Allowance
Giving children an allowance is a way for them to learn on their own how money works. When you give children an allowance, they’ll be able to make their own decisions and mistakes and will learn valuable lessons in the process. A seven-year old who spends all his allowance the day he receives it and then doesn’t have money a few days later will now know money is a limited resource that needs to be managed. If a child wants a toy that exceeds his/her weekly allowance, you can help encourage him/her to save it so eventually he/she has enough to buy it him/herself. Or, you might institute a rule that says your children must save a certain portion of their money for the future.
Give Them a Piggy Bank
For young children, an old-fashioned piggy bank can be an excellent tool to encourage them to save. Kids will get excited about saving the quarters and dollars they earn from doing chores around the house or that people give them, especially if you explain that saving means they’ll eventually be able to buy something they really want. Some people even recommend a clear piggy bank or jar since it helps kids see how much they’ve already saved.
Open a Bank Account
For slightly older children, a basic savings account may be the next logical step beyond a piggy bank. Many banks offer special savings accounts for children. Rather than just setting up the account for your child, make sure they are involved with the process of choosing and setting up the account. Even if you can set it up online, you may want to visit a bank branch in person for this task, just so your child can get used to interacting with financial professionals. Having their own bank account is one more way to help your children feel financially independent and in charge of their money.
Match Their Savings
One other way to encourage children to save is to match the money they set aside. Say your child wants to attend a special arts or sports camp one summer. The camp is expensive, so you might encourage them to help out with the cost by saving their allowance. Then, you can reward their efforts by matching however much they save. (This is similar to the way your employer matches your retirement contributions.) These incentive programs are a way to reward children for their savings efforts.
Have questions about how you can teach your children to save their money? Please call for some tips about how you can prepare your children now for a lifetime of financial security.
Copyright © Integrated Concepts 2015. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.