Teaching Your Kids How to Save Money
As a parent of teenagers, I can appreciate the challenge of teaching kids the importance of saving money. Their world seems to revolve around expensive “necessities” like cell phones, tablets, and video games. And thanks to one-click shopping, it has never been easier to find anything you want online and have it at your front door in just two business days. But as a financial educator, I can assure you that all hope is not lost and there are actually several things that you can do to raise kids who understand—and maybe even enjoy—saving money. Here are three of my favorite strategies.
Set Savings Goals
Does your child like to spend money as soon as it lands in their hands? Encourage them to think about what items they truly desire and have them write it down or create a vision board so they can see it often. According to a study by the Dominican University on the science of goal setting, you are 42% more likely to achieve your goals if you write them down and review them on a regular basis. Doing this can open your child’s eyes to the opportunity cost of buying impulsively versus saving to achieve their goal. Utilizing a savings goal chart or similar visual that you fill in as you progress towards your goal can help make the process more exciting for them as well.
Use Incentives That Make It Fun
Who says that saving money has to feel like drudgery? Make it fun by offering small incentives to encourage your child to keep their eye on the prize. If you are using a savings goal chart, create mini-goals along the way such as at the 25%, 50%, and 75% markers. The reward could be an economical family movie night or game night at home, a special trip to the park or ice cream shop, or even a small prize or privilege. Let your child help decide which incentives would encourage them to reach their savings goals. If they are a School $ense saver, they get the added bonus of earning prizes when they save their money at school. Kid’s Club members can earn prizes when they make savings deposits at any of our office locations.
Set A Good Example
Above all else—if you want to teach your child how to save money, model it for them. As the old saying goes, “Children learn what they live….” If they see you being intentional with saving, and if you include them in achieving goals together as a family, saving money is most likely going to become second nature to them. A study by the University of Cambridge found that money habits in children are formed by the time they are 7 years old. So don’t be afraid to talk about money with your child; make them part of the process when it comes to family finances. If you need to dip into your emergency fund to cover an unexpected expense, explain to them how you built that fund and why. Let them see how a situation that could have been extremely stressful for the family was avoided by purposeful saving. Sharing your own experiences with saving money will go a long way toward helping them develop healthy savings habits of their own.
No matter which avenue you choose to follow to instill good savings habits in your child, we applaud you on taking measures to get them started! Royal’s Financial Education team is always here to offer support and encouragement. If you have any questions or want more information about our School $ense program or Kid’s Club, please email us at SchoolSense@rcu.org.