1. Have a visual goal
With anything big that you want to accomplish in life, saving money requires having a goal. How can your child get where he/she wants to go without a finish line?
This will most likely be the easiest part of saving for your child. They want things all the time! The tough part will be narrowing their focus down to one thing. Also as a parent, it can be easy to just step in and buy something so you don’t have to listen to the complaining. However, this won’t help your child learn the value of saving and buying something on their own.
After they have chosen something they want, they need to create a visual to remind them of it during those hard times when they want to spend their money on something else. You can do this by cutting out a picture from a magazine or printing a picture from the internet. Then tape it somewhere they can see it and be reminded why they are saving their money.
2. Have a plan
What happens when they get their next $5 for doing their chores or $10 from their grandmother for a birthday gift? They need a plan. Otherwise they will say something to the tune of “LET’S GO TO THE CANDY STORE!!”
Establish with them what they want to do with each dollar that comes in. How much of each dollar do they want to save? A simple rule is to save 1/2 of each dollar. This allows them to still have some money to spend right away while helping them make some good progress towards their goal. Whatever they come up with, it’s a good idea to make it a rule. If they change it each time, they won’t have any accountability to keep making progress.
Something else for them to learn is “saving first”. As adults we can all attest to never saving enough money, no matter what the reason. A really good rule of thumb is to put your savings aside first before you do anything else with your money. This habit will help them always create and sustain a healthy nest egg as they grow up and become adults. This is one of those habits like brushing your teeth. If you just do it, you will keep yourself in much better health. Saving first gives you a sense of confidence over your money and will add years to your life instead of creating additional stress.
3. Discipline – yes, we know … it’s hard!
In an earlier post we talked about the value of delayed gratification. This is really the essence of saving your money as a kid or an adult. Being able to delay the satisfaction of something until a later date is almost counter-cultural.
We are pushed everyday by companies to do what makes us happy every moment. We are supposed to seize the day! Sometimes it can be good to delay giving yourself something so you will have it later on. And when it comes to money, not only will it be there in the future, it just might have grown a little too!
Learn more about helping your child manage their money by connecting with one of our staff at Surety Bank!