There are a lot of articles that give tips on teaching children how to save. Most of them sound terrific and some of them may actually work. I suggest a psycho-social development slant. Children view budgeting and their future in a different way than adults do. Understanding their mindset, and using that to help them to understand and enjoy saving money? Choosing this way to teach these lessons are more likely to stay, the kids are more likely to thank us, and we will have an easier time getting our message across.
1. Children have trouble imagining the far-off future.
Most children find the future too abstract. Adults talk about future goals but children up until about age 10 or 11 cannot grasp that sort of abstraction. Something concrete and making short-term goals are what needs to be aimed towards. The more concrete and smaller it is the better. You could ask your child what she wants; browse through catalogs, or the shelves of a Target, a Walmart or similar. Collaborate and compare prices with the qualities of the different products. Then work out together how long it would take the child to buy the object and what your child would need to do to accumulate enough to earn it. You may want to help her periodically review her progress.
2. Teens and tweens may have trouble distinguishing between needs and wants.
Most adults know that there are expenses you have to pay for (your needs) and there’s discretionary stuff (your wants). Teens and tweens may have a tougher time making that distinction. You can explain that school supplies and a uniform are needs, but the pack of Twix that her friend periodically has is a want. Discuss together whether they really ˜need’ that particular item or if they ˜want’ it because they may prefer to save for another ˜want’ that maybe somehow more important and gratifying.
3. Get a job!
Teens, generally, hate this ˜money talk’: Too boring. A great way of making budgeting more interesting – and teaching responsibility along the way – is to help your child get her own business. This is not as absurd as it sounds. Craigslist Gigs (look at the ‘writing’ option for instance) has opportunities that teens and even tweens can do. These include transcription (some tweens may be able to record conversations from a recording); posting ads; handwritten notes; even typing. Or – for a teen – writing, programming, illustration. Then there’s babysitting, raking leaves, shoveling snow, mowing lawns or doing every day chores. Join sites like TaskRabbit, or Amazon Technical Turk for running errands on- or off-line. Brainstorm with your child where her talents lie and what she likes to do.
4. Teens may not realize a budget can apply to them, too.
A great way to help middle school and high school kids is to understand the responsibility of spending and saving is to help them set up a budget. Show them your own: How you track income, your necessary expenses and discretionary expenses. Income for kids may come from part-time jobs, allowances, or gifts. Necessary expenses might include data for cell phones, gas for the car and car insurance. Discretionary spending includes things like movie tickets, outings with friends and digital downloads.
Encourage them to keep their own log for a week. This will help them to understand what they are spending their money on and how much they are saving Some kids will embrace this challenge and others may be unwilling to do so. The sooner they learn to save and budget the better they will be with money and finances.
And then there’s the child who wants to set up their own gig. They may find this idea particularly effective. They can be proud of themselves for coming up with their own idea to make money. This is a great tip for making saving money fun while enhancing independence along the way.
5. For older kids, branch out beyond the piggy bank.
The “piggy bank” is, generally, anathema for teens. And for some tweens, too. (So¦ babyish!) Gratify them by treating them as an adult and have them open their own savings accounts. You can explain that in addition to helping protect their money, a bank account offers a way to build their savings with interest. Watching the account grow can help drive home the point. This also helps to teach them to keep a record of their account so they can see how much interest they are making on the money in their account.
An online account may give more buck for the cash. Show children how to view the difference between offline and online accounts. Help them read the fine print and give them advice on which you prefer and why you prefer that certain account.
While you’re at it, your teens can also decide which and how many accounts they want to open in that bank. These can be simple personal checking accounts, savings or deposit accounts or a more complex account such as, Money Market Savings or CD account. Show your child the different options. You may feel comfortable with letting them choose the bank and accounts. After all, they’ll learn from their actions…
6. Teenagers are ready to think about trade offs.
Older teens may start to realize that it takes effort to save for longer-term goals. Indeed, 59 percent of high school seniors are willing to give up a car or electronics to help pay for college, according to a survey from the College Savings Foundation.
As you watch your children learn and grow, you can give yourself a pat on the back. This lesson is a great one to teach all children because in the near future they will be using it in their lives every day.