In the first part of our Kids and Savings series, we talked about the importance of saving money and how we, as adults, act as role models for the younger generation. Our culture seems almost driven on impulse spending, so the earlier we can teach our children about the value of saving their money, the easier it will be for them as they get older.
But, let’s be honest. Convincing kids to save money isn’t necessarily the easiest thing to do. With the media bombarding kids everywhere about the latest toy, game or gadget out there, building the discipline needed to save money can be a challenge. So, how do we help kids get more excited about saving their dollars and cents? Here are 7 ways to help your little ones not only understand the value of money, but realize they have control over how they can (or if they should) spend it.
1. The Classic Clear Coin Jar
Many people have the image of a piggy bank in mind when thinking of children saving their money. However, most of piggy banks have two disadvantages. First, they are not see-through. You want your child to see his or her money. Dave Ramsey talks about how kids love to literally see their money grow. It may sound overly simplistic, but watching the coins and dollar bills pile up in a jar makes it real. Second, the jar allows easy access to the money. It may seem contradictory, but to teach kids the value of money (see tip #4), you want them to be able to get to their money without having to literally break the piggy bank open.
2. Open A Minor Savings Account
Once your child starts to see the money fill that jar, it might be time to consider opening a savings account at the bank. New Foundation Savings Bank offers savings accounts where a parent can co-own an account with the child. An account only needs $10 to get started! The child can work with the parent to monitor the savings account growth and even talk about how interest works in the savings account holder’s favor!
3. Allow Them To Earn Money
If you’ve never given your child an allowance, now might be the time to think about the idea. The allowance can be tied to chores, if you’d like. An allowance gives the child a sense of ownership over the money instead of just asking mom and dad for money or for something at the store whenever they want it. This is how adults can help teach the value of money, which leads us to the next tip.
4. Allow Them To Choose How To Spend Their Savings
Aren’t we talking about saving money? Yes! But, when your child asks for something at the store or from Amazon, take him or her to his savings jar or account book and show exactly how much money it will take from their savings. You will likely be surprised at how the child might think twice about that impulse purchase when it has to come out of his or her own savings. But, if the child chooses to spend it, then it’s ok to let them do it. They’ll quickly learn they will need to save again to get the next “must-have” item on their wish list — or maybe decide they can wait after all!
5. Set A Goal
If there’s a high-value item your child wants, like a video game system or even a video game, then make this purchase a savings goal. Whatever money the child earns from allowances, an odd job or even monetary gifts can go towards that big-ticket purchase. The pride from earning and saving the money will likely feel just as good as the actual purchase!
6. Offer A Savings Incentive
Once you set a savings goal for your child, you can suggest a savings incentive. For example, if your child wants to save $50 for a new video game you can offer to kick in a little bit of the money near the end of the goal. So, if your child saves $45 of the $50 earned, you can give him or her the last $5 as a reward for having the discipline of saving the $45.
7. There’s An App For That
Have a child with a smartphone or tablet? There are a wide variety of apps that teach financial literacy. From games and simulations to strictly educational programs, you and your child can look through your favorite app store to find the best fit for your family — whether you have preschool kids or teenagers!