Teach Your Child to Save Money in 4 Steps
Stamina of Saving
Build the Stamina of Saving
In an age where TV commercials, internet ads and social media influencers scream at us to buy! spend! acquire!, it's more important than ever that we teach our kids the importance of saving.
For many kids, saving doesn’t come naturally. With a $5, $10 or $20 bill in hand, the possibilities can seem endless. A couple packs of fruity bubble gum. A brand new bejeweled princess tiara. A fresh, shiny soccer ball. Whatever purchase is calling their name, we need to teach kids the power of sometimes saying "no" to spending.
Focus on 4 Important Steps:
1. Pause before purchasing
To overcome the impulse to buy, we teach kids to pause before purchasing. Whether they are in the toy aisle at Target, the neighborhood grocery store or the basketball gym vending machine, parents can teach kids how to master the urge to spend. “Let’s take a photo of this Spiderman action figure. If you still want it next week, we can bring back your SPEND dollars and buy it then.”
2. Strengthen those saving muscles
With our kids, we practice making a longish-term saving goal and executing it. “I know you really want those new rollerblades with the light-up wheels. Let’s decide how much money you want to save each week towards your goal so we can make a plan to buy it.” And we help our kids follow through!
3. Save for the future
Once kids have practiced saving over weeks or months for an item or experience they are pining after, it is time to put money away for the more distant future. Whether it’s saving towards a car, college or beyond, kids can start small and slowly accumulate their money with an eye towards the future.
4. Model saving for our kids
Parents need to let kids in on the saving conversation. Talk with your child about saving money. Whether they are putting money aside each month to fund family trips, setting up savings accounts in their children’s names at the local bank, or funding college savings plans for their littles, the key is to model the importance of planning for the family’s financial future. Telling kids how parents are making money-smart plans for their future will help reassure them about what lies ahead.
Perhaps most importantly, kids need to learn that $10 in hand today is actually worth so much more in the future. With the profound power of compounding, any small amount kids save can be invested as they grow. While saving for a scooter is a real and valuable exercise, kids should also start to think about the far-off future and put their savings to work.
What item or experience are you saving for now? What are the bigger, long-term things you might start to save for in the more distant future?