Saving disciplines are a hard thing to implement in your children.
Typically, depending on their age, they’re not mature enough to grasp the concept. Therefore, rationalization and reasoning are not tools you can use. It’s hard to explain to a 3 year old what a dollar even is, much less it’s value. I’m pretty sure my nephew views cash the same as he does toilet paper. Useless.
It’s not hard though, to begin instilling disciplines that become habits. In fact, subconscious beliefs about money are formed during childhood. And that carries to adulthood. Healthy mindsets create healthy lifestyles. Especially if you begin them when they’re young enough to not even understand what you’re making them do. I don’t claim to have all the answers, and obviously philosophies and techniques may be different based on your views and principles when dealing with an individual child. All I can tell you is what I’ve experienced and what I’ve seen work with others.
Once children are old enough, discuss the value of money to them. Discuss the fact that its finite. You know, the whole ‘it doesn’t grow on trees’ thing…but a little more eloquently than that.
My parents most always abided by an 80/20 rule when dealing with my sister and I.
Any money we would get, whether it was gifted or earned, typically had the 80/20 rule applied to it. It was forced when we were younger, but as we got older and could make our own decisions, I found that I continued following the same habits that were required by me as a child.
What is the 80/20 rule you ask?
Spend 80%. Save 20%.
I’m going to go on a little sidebar here for a minute. I take the top 10% or more off of money that is earned to give to my church, a homeless shelter, a homeless person, a ministry, etc. As a Christian, I feel like this is the right thing to do, and it was instilled in me at an early age by my parents. Regardless of your religious beliefs, I do think it is important to teach children to give back. They are the future. Future leaders, CEOs, teachers, engineers, etc. They are the ones who will be helping those less fortunate. So the real discipline here is teaching the concept of giving back. Cultivating that mindset begins at a young age. What’s even cooler? Take your child to see what they’re giving back to. A children’s hospital? Take them to see the kids that are benefitting from his/her contribution. They want to go purchase a bunch of McDonald’s breakfast sandwiches to give to the homeless? Have them go down and distribute them with you.
What’s left after that, we spent 80% and saved 20%. And that 20% that had been saved through my childhood? It bought my first house at 24. another disclaimer: my parents invested my 20% in a balanced portfolio. not in a bank account.
That particular % may vary based on your personal preference. Some may think 90/10, 70/30, etc. Maybe it’s just a fixed $ amount. I’d just recommend keeping it where the child feels like they get to enjoy what they’ve worked for or been given. But stick to the discipline, whatever you set.
Teach your children that saving takes time. It doesn’t happen overnight. Patience is a virtue. Especially when your child is saving their spending money for a specific item.
We all know that our little people like to be entertained. So make saving fun for them. Suggestions for that? See the following…
- Create fun boxes or mason jars for saving and spending. That way, the child is clear which portion is for what. hint: paint the inside of the mason jars different colors, then use a metallic marker to identify which jar is which. or give the child free rein. sometimes those are the best options:)
- Spend $20 and get a ‘savings machine’…you know the coin collectors that do that ‘cha-ching’ everytime you drop a coin in? Kids love them. esp the ones where you can see the coin ‘swirl’ down into the bottom of the machine.
- A lot of pottery/ceramic places have piggy banks as an option that you can make your own. Have a mama/child date night and go decorate their bank. That way they feel invested in it and may think it’s cool to put their money in something that you guys created together.
- Create a ‘shop’ at home. You, as the parent, purchase the item the child wants, then put it in a box. Once the child has saved enough, they then buy from you. Sometimes seeing the item on a consistent basis will provide incentive to continue to save towards something. Personal view here? I like real-life interaction with the retailer and their employees. It gives the child real-world experience in common transactions. so if it were me, I’d only do this on seasonal items that can’t be purchased later. BUT THAT’S JUST ME.
- Get super excited about saving and affirm what they’re doing. This goes a longgggg way.
Do you guys have any other suggestions? We’d love to hear them!