Teaching Kids How to Save
By Holly Schoch
, last updated December 22, 2011
Teaching your children how to save has never been more important than now, when credit is no longer the gift it once was. With companies such as Smartypig taking the banking industry by storm, the message that saving is the way to buy the things you want has never been more loud or clear. Not only is saving the financially responsible thing to do, but it also creates a mentality that will better help your children monitor their spending. You can only understand the value of a dollar when you see how difficult it is to save it. For this reason, teaching your children how to save should also involve teaching them how to spend.
First, you should talk with your bank and see if there is a way to set up a bank account for your children with a prepaid debit card. Prepaid debit cards are a great way to show your children how banking and debit cards work without running the risk of having them overdraft. It allows them to get used to the idea that a piece of plastic can be valuable and important. You can have them practice balancing their bank account as well. If your children are old enough to work, talk to them about splitting their checks. They get to keep half of their paycheck to spend however they'd like, but only if they save half of it each week. This will force them to save and allow them to watch their money accumulate over time. As they see their bank account grow larger it will encourage them to continue saving. It is difficult to see the benefits of saving when the amount is trivial. But, when they receive a large payout in the end, they will come to appreciate saving. For younger children, you can make saving a game. Keep track of how much they saved and put it on a dry eraser board. Make it fun. Draw a piggy bank and shadow it in as they get closer and closer to their goal. The visual will help the child realize the progress that they have made.
If you are in the financial situation to help your child buy a car, encourage your child to work towards it and, whatever they save, you will match. This makes it feel more attainable to them, especially being that the amount they earn will be doubled in the end. By encouraging your child to set a goal for the amount they wish to save, it becomes more attainable. It is difficult for a child or young adult to grasp the idea of saving for a rainy day. Instead, have them save for the computer they want or the new shirt they've been dying for. Having an image or an amount to work towards will help to light the fire. Once they see how hard it takes to earn that money, they may be more hesitant to spend it and start from zero again.