The Importance of Teaching Your Kids to Save

Being a parent is difficult. It’s like on the job training. You kind of have an idea of what it will be like to have a family but the full magnitude does not hit you until you bring the bundle of joy home. You can list everything you did not like about your parents. You may even decide that you will never do the same things they did. You attended birthing classes and read all the books. This is helpful but most of your knowledge comes from being there every single day.

One of the first things you realize as children start to develop their personalities is their selfish nature. The world revolves around them.

  • They want what they want when they want it.
  • The parents are there to meet the needs of the child.
  • It is hard for children to grasp the word “no”.
  • Siblings are taught how to play fair, to share, and that they do not always get their way.
  • When given treats children want to consume them all right away.

It’s like they have no concept of saving something for another day.

Then comes the magical time when they start to figure out what money is. Having just a little money makes them feel rich. They want to spend it immediately, usually for something they have seen on TV. This is the time for parents to start teaching their child how to save money. The best way to do this is with examples they can understand.

  • It takes this much money to buy a certain toy.
  • You have a certain amount. Either you don’t have enough or you do have enough.
  • You can buy another toy for less money or you can save the money you have now until you get more money to put with it.

There are many principles that can be incorporated into teaching a child about money. Saving money for a future purchase teaches delayed gratification and patience. Deciding how to spend money teaches a child to make decisions. When they make bad choices they learn from their mistakes. If you give a child an allowance you should do it on the same day each week. Teach them to automatically put part of it in a piggy bank or savings account. The goal is that saving money will become a habit.

Teaching a child to save is not just about money, it’s an attitude. When children are taught to be aware of the things and people around them, they learn responsibility. If they break something belonging to a neighbor they might have to replace it with their allowance. When they do not take care of their toys and the items in their house, the parents have to spend more money to replace these. “I’ll just buy another one” is not always a good thing. Many times the adults who struggle to manage their money are irresponsible in other ways. Money is somehow connected to everything we do. One of the most important lessons we can teach our children is how to care about the feelings and possessions of other people.

Money is an interesting concept and often the subject of much debate. Some families implement the 10-10-80 rule. This is what I was taught. My father believed that everything we had belonged to God. We had an obligation to give back to God 10% of our income. When he gave me a dollar it was in change. I could spend eighty cents but I had to keep twenty cents. The next time I attended church I put ten cents of that in the offering plate, leaving me ten cents to save. This is certainly a topic with many different opinions. It is my belief that as we teach our children to save we should also teach them how to give back to others. If not to God, then for a good cause.

In today’s world it is more important than ever for parents to teach their children good money management principles, especially how to save. Rising real estate prices, the cost of raising a family, unaffordable health care, high college tuition, the price of gasoline, companies cutting back on benefits and the uncertainty of our social security system require that today’s children have better money management skills than their baby boomer parents.

Marg

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Filed Under Frugal Living, Lifestyle, Money, kids and money 

Comments

5 Responses to “The Importance of Teaching Your Kids to Save”

  1. Carnival of Personal Finance #147: Q1 Financial Advice Edition | Personal Finance Blog by Money Ning on April 7th, 2008 7:03 am

    [...] Faron from Financial Learn tells us the Importance of Teaching Your Kids to Save! [...]

  2. The Financial Blogger | Carnival of Money Stories #54 – My Old Man Thoughts Edition on April 8th, 2008 2:02 am

    [...] The Importance of Teaching Your Kids To Save by Financial Learn. I showed my son everything I knew about finance; he did what I told him to do [...]

  3. Heather Allen on April 8th, 2008 4:49 am

    Excellent post with very sensible advice. I liked the reasons for it being a necessity at the end.
    Many baby boomer parents and their children, who are parents now, don’t actually have the lessons themselves to be able to pass them on.

  4. Ben on April 9th, 2008 1:37 am

    Hey Marg,

    Thanks for a great article. I wrote a post with some similar thoughts on our blog, called: ‘Should a Child Spend the Whole Dollar?’
    My 3-year old is starting to be interested in money, and it’s so important to teach them good fundamentals - including saving and sharing. It’s never too early.

  5. warmheart on April 9th, 2008 2:55 am

    Great article with some sage advice. Children truly are the future and as adults what we teach our children will undoubtedly shape the world they live in as adults.

    I loved that you acknowledged the importance of giving that lesson learned early on will create a life of abundance.

    thank you.

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