Teaching your kids how to save money isn’t difficult. You can get started early by paying them for chores, setting up savings accounts, and making them sock away a portion of their earnings. Heck, you could even go old school with a piggy bank. And as kids get older you can teach them how to create a budget so that they learn to balance their income and expenditures in order to figure a savings plan into their equation. You can also teach them how to invest and even help them to set up retirement accounts early on. But while these are valuable life skills that every child should learn before they leave the nest, teaching your kids how to save doesn’t necessarily give them incentive to do so. For this reason you need to find ways to impress upon them the importance of setting aside money for a rainy day.
Of course, the most important reason to save money is preparatory. You want kids to have cash on hand for common expenses like college, home ownership, starting a family, and retirement. But they also need to be ready for unexpected emergency expenses such as accident or injury (leading to medical bills), car repairs (or replacement), or disasters not covered by insurance policies (a mugging, for example, or a flood in an area where most people have earthquake coverage). But telling kids about these reasons for saving money may not be enough. You also have to imbue them with a desire to save, and this comes from training.
The easiest way to give your lesson real-world impact is to tailor it specifically for your kids. Suppose your young daughter has her heart set on an easy bake oven and your son has been begging for a new skateboard. Instead of buying the items your children want (and teaching them that whining equates to rewards), make them save up to purchase the products on their own. The lesson they learn will be twofold. First, they’ll come to associate hard work with earning money. And as a bonus they’ll discover the wisdom of saving their income for something they really want, rather than blowing it bit by bit on lesser items or impulse buys that they don’t want or need.
As your kids grow you can continue to reinforce these sentiments by having your children pay for their own bicycles, followed by cars. They can even contribute to a college fund. And while you should not hesitate to match their contributions, it is in their best interest to learn the value of saving money early on as the lessons they learn in childhood are more likely to stick with them when you’re no longer there to offer motivation.
Later on, when they’ve entered adulthood, they can take the initiative to invest in stocks and bonds, start their own businesses, and assess merchant services reviews in order to obtain the best financial services. But while they’re still under your roof you have the power to teach them not only how to save money, but also why it is so imperative. An effort on your part early on could mean the difference between kids that support you in your old age and those that are still living in your basement as you continue to work to support them well past the age of retirement.