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Today’s adults are not so good at saving money. Many have over-extended credit cards, expensive cars, and huge mortgages. They don’t have any money to fall back on, either. It may be too late for you, but don’t set you child up to fail. If he doesn’t have a savings account, get him one, and teach him how to save his money.
Kids are impulse driven. The younger ones have no concept of value or the cost of goods. Therefore, they’ll spend $1 as quickly as they’ll spend $20. As they’re learning the value of money, you can also teach them a thing or two about personal finance and budgeting.
If your child gets $20 for his birthday, make him put $15 in his savings account, and tell him the other $5 is his to manage and spend wisely. He’ll immediately understand that he needs to protect his cash; not only by saving it, but by thinking about what he purchases. If you really want to teach him some finance lessons, set up some spending scenarios and have him work through them.
- Candy v. Video Game Download - if your child wants to buy a $2 bar of candy, and he’s also bugging you to download a $1.99 game app onto your phone, give him a choice. Ask him which choice will give him more pleasure for his money? The candy gets eaten once. The game gets played several times.
- Give you a dollar v. loan you a dollar - what a great way to make him understand credit. Tell him you’ll pay the loan back with interest, just like you do to the bank.
Make your child’s relationship to money interactive, and the savings part will be easy.
