Monday, February 1, 2010

Teaching Your Children to Save


By Karen Saley, Extension Specialist

With the personal saving rate at an all time low, now is a good time to start teaching your children about the importance of saving.

Be a good role model
Children learn the most by watching what others do. Show your kids that paying bills on time, being a careful spender and being a diligent saver are the skills they will need to establish a secure financial future.

Explain needs and wants
Shopping trips are good opportunities to talk about the difference between needs and wants. It's easy to show examples of “needs” and “wants” instead of just talking about them. You need shoes, but do you need $100 shoes when $20 shoes will do just fine?

Different types of savings
Develop a savings strategy by labeling four containers sharing, spending, short-term saving, and long-term saving. For every dollar that your child receives have them deposit it into these containers in the following way 10 percent in sharing, 30 percent in spending, 30 percent in short-term saving, and 30 percent in long-term saving.

Banking realities
Take your child to a bank and show them how transactions work. Write a check and cash it, make a deposit, show them how an ATM works. Open a savings account for your child and talk about what credit cards are and how they work.

Earning some money
Make a list of all the chores that need to get done around the house, and put a dollar amount next to each chore. Children can then pick and choose which chores they want to do depending on how much money they would like to earn.

Making wise choices
Have your child help you decide what to make for dinner for the family using a specific amount of money. Make your shopping list then go to the grocery store and see if you can purchase what you need with the money you have. If you can’t, talk about what the alternatives would be.

Saving all year long
Discuss with your children ways to save money throughout the year by packing a lunch, recycling clothes with family and friends, or having a garage sale for items they no longer use.

It’s never too early to start teaching children how to handle their money responsibly. The earlier they establish good money management practices, the more secure their financial future will be.

Join us on February 10, 2010 for a webinar entitled "Money Smart Kids." To join go to and click on webinars.


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