It is important for parents to talk about WHY saving is important. Kids live in a world where they are bombarded with commercials that encourage them to spend. Therefore, kids need help in understanding the benefits of saving. Kids need the topic explained to them in a way they can relate to. When kids understand why they need to save and how it will benefit them, then they are more likely to save.
Since commercials advertise to kids of all ages, your kid probably has a wish list of things they want. When they receive money, they are probably quick to spend it on what they want and can afford. While it is hard to get your kid to stop spending, it is much easier to get them to delay making purchases. Therefore, ease into the topic of saving by introducing it as a way to buy things they otherwise could not afford.
The way you approach your kid is important. Tell them that within the next couple of days you would like to have a conversation with them about money. Your kid will be intrigued.
Don’t be surprised if your kid comes to you wanting to start the conversation. When your kid is ready to talk, say something like… “I want to talk about how you can afford things you otherwise could not be able to, by using the strategy of saving money. Saving money is the process of putting a little aside, often and allowing it to accumulate into a lot. It is an important habit to develop because many of the nicer things in life cost a lot of money.
Think of cars, a wedding, and a house. To develop the habit of saving, start small. Think about saving for a new gaming system, laptop, or phone. Then over time, you can set bigger goals to acquire more expensive things. To start, pick a hiding spot in your room to start saving your money. When your savings begin to grow, your money can be moved to a credit union or bank.
If you begin saving now, you can more easily afford the nicer things in life. When you are ready to make a purchase, you will have more choices. You will not have to settle for the lowest cost item. Instead, you will be in a better position to afford upgrades and accessories. You will have more fun shopping because you can shop for what you like instead of what you can afford.”
Then ask your kid what is on their wish list. Have them pick their favorite item and challenge them to save for it. Picking an item will give them a goal to aim for.
Once your kid has picked a goal, brainstorm different ways to save money to afford the item. If your kid can’t think of any ways to save money, make a few suggestions. For example, let’s talk about a teenager who loves to eat fast food with friends several times a week. The immediate gratification of eating, combined with being with friends, makes it difficult to say no, especially when fast-food commercials are encouraging them to get what they already want.
Simply stating that they can save money by doing less of what they love is not likely to work. Try a different approach. Say something like… “I know you like to eat out with your friends a lot, but you could save money by eating out less frequently. I know that may not sound like a good idea to you, but you have other options. Your friends could come over to the house and hang out while cooking. What do your friends like to eat? If you make a list of needed ingredients that we don’t have at the house, I could pick them up at the grocery store.”
When you suggest how to save money, you can also suggest how to enjoy an activity differently so that your kid doesn’t feel deprived of what they really want. In this case, it is hanging out with their friends and eating.
The more ideas you brainstorm with your kid, the more likely they will pick an option that works best for them. Help your kid save a little now to get comfortable with the idea. Help your kid form a new habit. Once your kid develops the habit of saving, it will be easier for them to save for their future. Once your child has developed the habit of saving, continue to encourage them to save. Your kid is bombarded with commercials every day and needs regular reminders about the importance of saving.
Regularly remind your kid that savings is important by saying things like… “Saving money today will give you money to spend tomorrow. Save a little, often, and then you can purchase things you otherwise could not afford.” Help your kid understand that saving does not deprive them of something they want now, but instead, it is a way to get something they want in the future.
When you make saving relevant to your kid and help them understand how it will improve their life, they will take an interest in the topic. Once they are interested, keep the conversation going by introducing new related money topics like what to do when they received their first credit card offer and are tempted to overspending.