Children may learn the values of nickels, dimes and dollars in school, but many don’t learn how to manage money and credit – or how to save money.
While it may take self-discipline, saving is important because it can help provide a security parachute in the case of unexpected expenses or emergencies. It also can help people reach their financial goals – buying a home or a car, for example.
You can begin discussing the idea of saving even with young children. Kindergartners can help list occasions when people might receive money for gifts – and may even get some money themselves. If they do, that provides you with an opportunity to talk about something they’d like to buy with it, such as a toy or gadget, as a savings goal.
You can help them decide how they want to use their money – how much they want to spend and how much they want to save. You can even discuss an experience where you decided not to spend money, and why you made that decision.
Some other suggestions to consider:
– Discuss “wants” and “needs.” Talk to young children about what they need – food, shelter, and clothing – versus what they want. Think of an example where your wants have taken a backseat to your needs in your own budget.
– Discuss savings. If your children receive an allowance, or receive money as a gift, talk with them about how they want to use it and the benefits of saving some of it.
– A (saving) place. For young children, this might be a piggy bank. Older children can be set up with their own savings account. Track the savings together to show progress being made.
– Track those dollars. Knowing where they spend their money can help children learn. Encourage older children to write it down when they purchase something and add up their purchases at the end of the month. This is an opportunity to talk about how changing spending patterns may help them reach their savings goals more quickly.
– Be a lender. If there is something your child wants to buy, you could consider loaning them the money to do so – with interest.
– Lead by example. Consider looking at your own saving habits and setting an example. You can discuss your savings with your child. Or you could save for a goal, such as a trip, as a family.
– Keep talking. Schedule regular check-ins to discuss money, or make money discussions part of your family routine.
Talking with your child about money and finances, starting at a young age, can help lay the groundwork for financial success later in life. And if children learn to save as they grow, they can take a step toward establishing more responsible financial behaviors as adults.
While any time is a good time to start the savings discussion, April 12 is National Teach Children to Save Day. Teach Children to Save is a free national program geared toward children in kindergarten through 8th grade, sponsored by the American Bankers Association Foundation. It uses banker volunteers to help young people develop savings habits early in life.
To learn more about helping kids learn to save, you can visit the ABA’s Teach Children to Save website.