SAVE. I used to think of it as a four-letter word. Now my kids do too. For people with their entire lives ahead of them they can be short-sighted when it comes to their finances. So, how do you teach them to be more responsible? Here are four tips to help guide your children toward saving.
We like to start with goal setting. This happens to be the same way we begin with adult clients. Have your child brainstorm some big-ticket items or experiences that they desire. You might learn something new about them in their answers. For example, I never would have imagined that one of my son’s biggest dreams currently is to have an entire ice cream cake to himself! At Lindenberg Financial we are big believers that anything becomes more achievable once it’s written on paper. Discuss a timeline to reach this goal and regularly check in on its progress. Kids tend to be visual so a chart they fill in is helpful to keep them focused.
Allow kids to earn their own money. An allowance offers an excellent way to help children learn how to handle money. There is some debate about whether it’s more helpful to provide allowance without conditions or tie it to completing household chores. The reality is, they need some sort of income to learn about budgeting and saving.
Have a system. For the actual saving, I love the “three jars” system. It’s as simple as it sounds; label three jars one for saving, one for spending, and one for donating. If jars aren’t your thing a simple Amazon search for three-section banks will yield tons of adorable results.
Give them control. When your child is older open an account for them. Explain that this is where they can access their allowance. Show them how to monitor their account and manage their activity. Encourage them to check their balance regularly. The account balance doesn’t matter as much as helping them understand how their money was spent. If it’s empty, help them understand why. If it’s untouched, ask them why. Help them understand their spending habits and the impact of those habits. More than anything, be patient. Their own account is an opportunity to make mistakes and have you there to help them grow and learn.
Helping your kids become financially literate should pay dividends as they get older. Plus, it’s an opportunity to make money fun and engaging! Hopefully, you have found these ideas helpful.
Teaching Kids to Save
August 25, 2022