6 Ways to Start Teaching your Children to SAVE
The American Institute of Certified Public Accountants recently reported that despite the current economy, people are still managing to save money. In a survey conducted for the AICPA by Harris Interactive, although 54 percent of adult Americans say they've not been able to save over the last 12 months, a large number – 46 percent – have managed to save something. How did they do it? Many said they simply curtailed their spending on discretionary items like dining out, travel, and clothing.
The accomplishment is an important message to send to our children. Saving is possible even in tough times, and it's essential for getting a good start on a secure financial future. The Illinois CPA Society recommends teaching your children to save as early as possible and offers these six ways to get the lesson started:
Start now. It's never too early to save and start a good habit that can last a lifetime. Even children as young as five years old should be taught that some portion – no matter how small – of allowance or money gift received should be saved.
Say why. Answer the classic kid question of "why." You save money now for things you may need or want later. Encourage children to save for things they want like cool new shoes and tell how you saved for something the whole family enjoyed like a vacation. Don't forget to add how you save for emergencies such as home repairs, and things they really need, too, like a college education. Find opportunities to show the difference between "needs" and "wants." Let them know they can save money by making good choices.
Show results. Whether the money is in a bank account or a piggy bank, visit the "savings" and make it real. Watch the progress of how a dollar becomes five dollars and five dollars, twenty dollars.
Set an example. Talk through what you do with money and how you save. If you saved five dollars using coupons at the store, show how you'll add five dollars to your bank account. Explain the benefits of saving and the trade-offs in spending – how not going out to eat means you'll have enough money for the whole family to see a movie together instead.
Stay positive. Don't convey a negative impression about how hard it is to save and keep track of your money. While saving money is not a game, it can be interesting and rewarding. Acknowledge the sense of accomplishment your child should feel for every dollar saved.
See it though. Make sure your children understand that saving is an ongoing process and do your part by talking about saving on a regular basis. Send the message that saving is something you always do, and money saved is something you should always have available to you. Once you save enough for a goal like a new Wii game, you don't stop saving.