America is a nation of rabid consumers where spending money is promoted instead of saving. Getting in the habit of saving, especially from an early age, is critical to achieving financial independence. The sooner we get in the habit of saving the easier it is to stick with it. So how can we teach kids to be savers when they’re constantly exposed to advertisements, peer pressures, and an acceptance that saving is something to worry about later? Parents must model good savings habits and keep an open dialogue with kids, even as young as kindergarten.
Be an example
Don’t let your own mistakes or insecurities with money hinder having conversations about healthy spending and savings habits. Make them part of everyday casual discussions. Express pride when getting a good deal, and try to avoid negative comments like “We can’t afford it.” Instead, consider saying “If we want to go on vacation this summer, buying a new iPad will have to wait.” Children ultimately learn best from imitating their parents, not from nagging or demands.
I once heard a child say, “Mom would have more money if she didn’t give it all to the bank!” He accompanied her to make deposits, but she never mentioned she was saving the money for later. An innocent child only saw that she was giving money to the bank and he blamed the bank when mom said no to a purchase. Trips to the bank are great opportunities to discuss the purpose of saving.
Practice delayed gratification
Self-control and delayed gratification are essential life skills. Like the famous marshmallow test, offer your child one treat now and if they wait, they can have another. Repeating phrases out loud can help kids stay on track. “If I wait I get another treat.” This practice shows children they have a choice, but waiting provides a greater reward.
Set a goal and provide incentive
Remember when you were a kid and $100 seemed like a million? Help prevent feeling overwhelmed and discouraged. Consider matching every dollar saved, or provide another reward or incentive that will motivate saving. Establishing an allowance for household chores or other duties provides a way to earn money. Saving a little at a time towards a goal makes it less overwhelming and also provides an opportunity to practice basic math.
Separate money for different purposes
While we want to promote savings, we can’t avoid spending. Teaching kids how to separate their money for different purposes can be a great visual example of making choices. Consider purchasing a piggy bank with separate compartments for savings, spending, investing and giving. Encouraging kids to give a portion of their income to charity is not only a nice thing to do, it teaches kids that money can help others, and helping others is rewarding.
Everyone makes mistakes. Kids learn by doing, and making a mistake is a valuable lesson that can prevent bigger mistakes in the future. Being a successful saver as an adult can mean making tough choices. The sooner kids learn to navigate tough choices the more successful they will be with their money, and throughout life.