How to Raise a Child Who is a Savvy Saver
My kids may share an upbringing, but when it comes to money management, they are on opposite sides of the financial spectrum. Give one of them $10 and she’ll run right out and spend it on whatever catches her eye; however, when you give the other child $10, he will carefully place it in a safe hiding space for as long as it takes to be certain that it is spent on the perfect item. You could try to attribute the difference to age, gender, or birth order, but I think it is as simple as this: one is a spender and the other is a saver.
If you are parenting a natural born spendthrift, following are a few ideas on how to bring out his or her inner saver.
Make them work for it. If all of your allowance-driven money management lessons are falling on deaf ears, try having your children earn money instead of giving it to them. You might find that they appreciate the value of a dollar more when they have invested some sweat-equity. To make this easy for you and fun for kids, consider using a free online chore chart like the one at http://www.myjobchart.com/.
Let them make mistakes. Don’t be tempted to rescue kids from their financial missteps. One of the most important lessons we can teach our children about money is that we cannot have everything we want. Try this Savvy Spender and Saver activity to help your children realize that if they spend too much money now, they won’t be able to save as much for the future: http://www.jacolorado.org/savvy-shopping-saving/.
Incentivize saving. Just like an employer-matched 401k encourages employees to save, you can show your child the benefits of saving by offering them a matching contribution. For example, make a deal (in writing) that your son is able to save $50, you will kick in an extra $25.
Make it easy for them to visualize benefits. Goal setting is an important component of money management, but most kids are short on the patience needed to look long-term. Make it easy for kids to see their savings progress on a regular basis by using a clear piggy bank or pasting pictures of what they are saving for in a conspicuous place like the inside lid of a lunchbox.
Finally, don’t forget to model the behavior you want your kids to adopt. We all know that what a person does is more impactful than what they say. Your kids are probably used to seeing you get cash from an ATM, so consider balancing that message by taking them to the bank with you to make a savings deposit. You can also brush up on your personal financial literacy skills by taking advantage of the free programming offered during Money Smart Week (April 20 to 27, 2013). You can view a list of Money Smart Week activities at http://www.moneysmartcolorado.org/.