Teaching Your Child to Save (and Spend)
For those parents that are teaching your children to save, you are providing your children with a priceless lesson. Those children that are taught to save are more likely to save as adults. And those that are taught how to save and spend smartly are even more successful! Much like adults that have a budget, teaching children how to spend their money though a budget is a smart strategy. Here are a few ideas to get you started to help teach spending strategies to your children:
Explain Debit Cards- Many children think that debit cards have unlimited funds; each time you swipe you get something for ‘free’. A good way to show this is to allow your child to view your online bank account and show the money being subtracted. With advances in online banking technology, you can even show the store that deducted the money!
Set Budgets for Purchases- Discuss with your child how much you want to spend on an item; for example new summer swimsuits for the kids. Have your child select a swimsuit that is within the ‘swimsuit budget’ by looking at price tags. Budgets can be set for treats, new toys, and as your child ages, even cell phone plans and limits.
Develop Save and Spend Accounts. Start when your child is young with the simplicity of a ‘piggy bank’ and wallet or purse. The bank is to save, the wallet or purse is to spend. Your child will learn that when the spend money is gone, there is no more. They will also learn to ‘ration’ the money accordingly depending on their ‘wants’. For example, discuss with them purchasing one toy versus purchasing various smaller items. Many children view ‘more’ as better than ‘only one’. As your child grows, the save and spend accounts become savings and checking accounts.
Discuss Credit and Cash Options. In a world where materialism is all around, teaching your child the benefits and risks of credit is key to their financial success. If you manage your credit wisely, you can instill the same in your child if you have open discussions with them on your credit. If you have issues personally with credit, find help for yourself so that you don’t create generational credit problems. Remember that children learn by example.