Teaching Your Children to Save
As parents, we want our children to grow into successful, well-adjusted adults who understand the value of money and who know how to manage it. But money management isn’t a skill learned by osmosis. We can’t just hope they’ll soak up what they need to earn and save money, prepare a budget, manage a checkbook, pay their bills and stay out of debt. We have to teach them. And beginning to educate our kids in money management will be most effective if we begin early, even as young as four or five.
Regardless of the age of your children, look for ways to continually help them learn the value of money and the skills they need to manage it properly.
• The Bible says that he who doesn’t work, doesn’t eat, and while you can’t neglect feeding your children, you can teach them that money is earned not simply given. Use an allowance system in exchange for weekly chores and household help. Assign age-level tasks that your child can easily accomplish and pay them an allowance based on their completion of those tasks. If they don’t do their chores, they don’t receive an allowance.
• Closely related to teaching your child that money is earned is the concept that money must be budgeted. If you spend everything you receive in one day, you won’t have anything for later in the week. A child will learn this important lesson if, when they spend their entire allowance in one day, Mom and Dad don’t give them more money until their next allowance.
While this may be especially hard for some parents, this is a very important lesson for children to learn. It develops lifelong budgeting habits that will serve your child well when she is on her own and supporting herself. If you truly want your children to learn that money is earned, force yourself to not give in to their pleas for more spending money. It won’t take long for your child to begin to make wiser spending choices in order to have money left at the end of the week.
• Understand reaping and sowing. The principle that you “reap what you sow” applies to all areas of life. Teaching a child to give – either to their church, or to a favorite charity – will help them develop a generous spirit that will last a lifetime.
• Teach them to “pay” themselves. Saving money is how we pay ourselves by providing for short and long-term goals and ensuring a safety net of ready-cash in the event of an emergency. While your child may not have an emergency, the sooner they learn this concept, they better they’ll be since it’s much harder to develop a habit of saving when we don’t practice it in our youth.
• Help them start a savings account. As soon as your child has the minimal amount required to open a savings account, take them to the bank to set up their account. This account can be used for long-term savings goals such as college, and will help them develop a lasting savings discipline.
• Help them to understand the banking process, rather than simply doing it for them. Talk to them about how to fill out the deposit forms – even if you have to fill out the form. Explain the idea of earning interest and how it will make their savings increase.
Of course, this education will have to progress as the child grows, but even the youngest child can understand that they have to “tell the bank whose money this is” on the savings form, or that they “get paid for keeping their savings in that bank.” Again, this will be excellent practice for later in life when they must manage their own finances.
• Look for the best interest rate. You probably won’t want to settle for the first savings account you find, or the one offered by your bank simply because of convenience. It’s important that money invested in savings earn the best rate it can so it can grow the fastest. This will encourage your child to save even more as they see their savings increase.
• Be sure to allow money to spend. While you want your child to understand the value of money and you want him to save, he also needs to understand the joy of having money to spend. Be sure to allow a portion to spend however he chooses.
• Encourage short and long term savings goals. College may be a long-term goal, as can a car, a senior trip or some other large item. Short term goals can include a new bike, skateboard, shoes or anything else your child can save for within a few weeks.
THere are others ways to teach our children about money, but the important thing is that you start right away. Doing so will ensure you’re raising children who will become budget-conscious adults with the abilities needed to provide for themselves and their families.