I was one of those kids whose money always burned a hole in my pockets. If I got a dime, I wanted to spend it all right away. I couldn't seem to hold onto it, and that habit carried into my adulthood. Money was so scarce and so tight that I never knew when it would come again, so, by gum, I was going to get what I wanted.
Over the years, I have developed a sense of frugality and a need to save. This is one habit we really need to instill in our children, especially those who tend to not hang onto what they get.
Here are a few tips to help children learn the joy of saving.
It's up to you
As important as money management is, it is one subject not taught in school. You will have the sole responsibility of teaching your children about handling their money, and how to save for a rainy day.
According to Beth Kolbiner, author of the NYT Bestseller "Get a Financial Life," children as young as 3 can grasp concepts about spending and saving. The sooner you begin, the better they learn. Not only can they learn that young, but in a study at Cambridge University and commissioned by the United Kingdom's Money Advice Service, children's financial habits are developed by age 7. That means not only can you start early, you must.
This is a critical lesson to learn not only about money, but it will carry through into other areas of their life. Teach them the value of saving for what they want, and that it will be worth the wait and trouble. Instant gratification ruins children teaching them unreasonable expectations. Every child in your neighborhood may have been given a bicycle, but teaching your child to save for theirs will set an important pattern that may keep them out of debt as an adult.
One suggestion is to set them up with clear money jars. Whenever they acquire any money — birthday, chores, just because — have them divide it into three or four. In our home, tithing was important and it was a strict 10 percent which came out first. For those this doesn't pertain to, set up three jars. One for savings, one for spending, and one for sharing. The spending jar is for small, everyday purchases like a pack of gum or a piece of fruit. The sharing jar is for charity, another important lesson to teach children. If they have a friend in need or a cause they believe in, they can put the money in there to donate. The savings jar is for something they might want down the road — larger items that must be saved for.
Bargains often come along at the most inopportune times. Teach your children this. They don't have to have something in mind when they begin to save, but if they do save, they will have the money they need when something extraordinary comes up. This is a great lesson to teach by example. Keep your own money jar savings where they can see it, and when a deal comes along you can't believe, show them how happy you are that you had the savings when you needed it.
Consider matching their savings
If you feel that your children are saving for something worthy, consider matching their savings. This works especially well for large ticket items like bicycles or electronics. Sometimes it is just so hard to save, but if they are diligent add to their jar and tell them it is because you are so proud of them for resisting other things to save for what they really want.
The chore conundrum
This is something families are generally very divided about. Should you pay your children to do chores? My feeling is this: There are certain chores that they need to do as part of a family of people who contribute to the family as a whole. They do them to show love. Keeping their room tidy, taking out trash, setting the table; things like that keep a household running smoothly. In addition, however, I like to provide opportunities for "extra credit." These are things that are a little less routine and often a little more yucky. Washing out the trash cans, cleaning the garage, bathing the dog. Put a price tag on these specialty chores and allow them to sign up to do them for the extra boost to their savings.
Another way to promote the earning of extra savings is to have them provide something you need. One great idea is growing fresh produce for you. Give them the option to take some of their spending money and invest in their own business. They can buy used pots from the thrift shop or rummage through the garage and find them. They can then buy the seeds and propagate fresh herbs, tomatoes, salad greens or other things that are easy to grow and care for. Tell them you will buy these goods from them for the same price you would pay at the store. If they don't put the work into it, they don't earn. This is a terrific way to teach them about entrepreneurship, stewardship, and cost of doing business.
Teaching children to earn and save will help reduce the ridiculous state of debt the country is in now. The "have to have it now" mentality is ruining credit and tearing families apart. Help get your kids on the right track and do it sooner than later. Here are more ways to teach children to be savers not spenders.