Teaching Your Children How to Save

Posted by BeingPreparedAdmin on Jan 22, 2012 in Savings | 1 comment

I have had recent thoughts about how to teach my children about saving for their future. I have watched as people that I know are at the point in their life where they should enjoy the golden years. Instead of enjoying their golden years they are figuring out that they will work the rest of their lives, regardless of whether they want to or not. It is very frustrating and disappointing watching them go through this. My thoughts go out to them, but always come back to my family.

My children are young and I want to teach them how to save. One of my most favorite books is The Richest Man in Babylon. All the principles in this book I want my children to learn, but there are two in particular that have resonated with me today. The first is to save 10% of all your income. The second is to put that 10% to work to create more income. I wanted to focus on saving for this article.

If started at a young age, saving 10% of your income could be sufficient. The trick is to teach them how to save now and not spend their money on instant gratification. I came across a couple of thoughts of how to help my children develop the habit of saving. I wanted to share some of those tips.

1. The Piggy Bank. The biggest issue with my children is they put their money in a spot where they can get it. You need to find a place, preferably a bank or credit union, where they can’t access their money. They need to learn that the 10%, I prefer 20%, will not be touched.
2. Reward for Savings. My dad came up with this one. He thought of creating a contest that rewards them saving more money. The child that saved the most would get rewarded. That would be a monetary reward for them. A minimum of 10% would still have to go into savings. I know there are different thoughts about rewarding behavior, but I don’t see anything wrong with this one. Make the learning experience fun for the children.
3. Work for Money. I want my children to know that they have to work for their money and that they need to make their money work for them. My wife is good about giving the children extra jobs around the house to earn money for them to buy things. They need to know that they work for that money and the savings they put away will work for them.
4. Educate Them. I grew up in a family that we didn’t talk about money. I was never educated about finances, but grew up with a great family that taught me correct principles of being a good person. You can’t be afraid to talk to your children about finances. You don’t need to share all the finances, but they do need to be educated. How you do that is up to you. I had to learn from my own financial mistakes, but it would have been a lot easier if I have that education growing up.

I know that my children will have to make their own decisions. No matter how hard I try, they have the ability to choose. My job is to help them be educated enough to make those right decisions. Please share your thoughts and tips on how to educate your children on saving.