by Margaret Shauers

Created on: April 17, 2009   Last Updated: April 23, 2009

TEACHING CHILDREN TO SAVE MONEY

Children learn from what they see their parents do. Make savings a regular part of your own spending pattern, even if you cannot save a lot every paycheck. Then also save for different purposes and let children see the benefits of short-term savings while also emphasizing long term savings.

Small children simply cannot visualize ever wanting to go to college, for instance. You should, of course, begin saving at least a little money for this when they are young. Just don't expect anyone who isn't in high school to appreciate this type savings too much.

Do short-term savings plans (and save yourself interest) by socking away money before you make a major purchase like a flat screen TV or a family vacation. Start with savings desires for the entire family. Children like fairly immediate results so start small and build up.

Write down a tally of what you now have with what you still need after every paycheck. Even very small children can see the, "We only need XXX" numbers go down.

Definitely have children understand how long you think it will take to reach the goal. Make sure they know that if anything goes wrong (a water heater or other appliance going out, for instance) the waiting time might be longer. Unless it's truly major, don't touch the savings fund, but let children know why you cannot add to it that paycheck. If at all possible, add even a small amount.

You can help them learn to save their own money, as well. It doesn't matter if it's allowance or gift money, but some money should always be saved.

Don't give in to the whining or begging when a child wants you to help pay for a new c/d, a new game disk, even a small model kit. Whether the child wants to or not, make him/her sit down and figure out how long it will take to pay for it by saving his/her money.

"How much of your allowance (or from this gift) do you really want to spend now on other things? You can, but then you only will have XXX left and it will take a while before you can buy...(whatever)."

Do explain sales tax to children. That's hard to conceive when you only have $5.00 and what you want costs $4.99, but with sales tax will be higher. Children should learn early about add-on taxes. One young man got his first job at age 15 and went home totally upset. Who was this FICA person who was stealing his money?

As soon as possible, get children into saving for...educations, a car they wish to own. And do teach them the benefits of savings accounts where someone else pays you a bit each month just for saving. Everyone loves getting money with no effort. Being paid interest is something even a young child can understand.

Begin basic and build...and always, always, always be seen doing the same things to prove to your children that there are benefits to savings.

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