Its My Money and I’ll Spend If I Want To

As parents, we all see the benefits of teaching our kids about money management from an early age. As we say every week, one key aspect of financial literacy is saving, but it's a lesson that can sometimes be met with resistance from our little ones. This week, we'll explore some tips and strategies for encouraging your kids to save, even if they don't want to!

1. Lead by Example

Kids often mimic the behaviors and attitudes of their parents. If you want your kids to develop good saving habits, show them how it's done. Discuss your own savings goals and practices openly with your littles. Explain why saving money is important (over and over again), and let them see you setting money aside for future expenses or goals. One great little savings to start right now might be a Christmas fund. Socking money away for gifts for this year might be a great way to illustrate your point in just a few months. Remember, your actions speak louder than words.

2. Set Clear Goals

Help your kids establish clear savings goals. These goals could be short-term, like saving for a new toy or video game, or long-term, like saving for college or a special trip. When children have a specific purpose for their savings and a specific number in mind they might be more likely to feel motivated to save. Sit down with your child and make a list of their goals, discussing how much money they'll need to achieve each one.

3. Offer Financial Rewards

I love this one! Consider offering small financial rewards to incentivize saving. For example, you could match a portion of the money your child saves each month or provide a bonus when they reach a specific savings milestone. This can make the act of saving more enjoyable and satisfying for your child. This is like a mini 401K for the kids!

4. Create a Visual Savings Tracker

Visual aids can be powerful motivators for kids. Create a simple savings tracker chart that your child can use to mark their progress or sign them up for a digital tracker like Greenlight. Each time they save some money, let them fill in a section of the chart or transfer money on the app. Watching their savings grow visually can be exciting and encourage them to keep saving.

5. Encourage Earning Opportunities

You all know I am a huge fan of teaching kids how to earn. Encourage them to take on extra chores or tasks around the house in exchange for some cash. They can also do a little side business if they would like. This not only gives them a sense of responsibility but also reinforces the connection between work and earning money, which can lead to a greater appreciation for their savings.

6. Give them a reality check

There is nothing better than the truth if they are seemingly begging for it! Showing your kids what it really takes to run a house, keep a car, or feed a family can be very eye-opening when it comes to convincing them to save. Let them in on what you actually have to spend to live the way that you do. Show them real numbers and have the conversation, again about saving and keeping their money NOW so they can live the way they WANT later.

7. Show the Power of the Compound

In the book, Make Your Kids Millionaires, by Loral Langemeier and Kyle Boeckman there is an awesome illustration of compound interest. It goes like this…

The Rich Neighbor Example
Your rich neighbor offers you a one-year contract to take care of his yard each week. He offers two compensation choices:
1. $20,000 weekly or
2. A single penny the first week with your salary doubled weekly

Which would you choose?
Well, here is the math:
  Option 1 Option 2

Week 1 $20,000 $0.01
Week 13 $260,000 $81.91
Week 26 $520,000 $671,088.63
Week 40 $800,000 $10,995,116,277.75
Week 52 $1,040,000 $45,035,996,273,705

Yep! Option 1 leaves you with around 1 million dollars and option 2 leaves you with over 45 trillion!! THAT IS THE POWER OF COMPOUNDING!!! Allowing money to earn interest on not only the base amount that you continue to save but on all of the interest that it earns as well is life-changing! This is why if kids will save and invest now, they are GUARANTEED to be millionaires! Now is the time to tell them, “told ya so!”

7. Be Patient and Supportive

Finally, be patient with your kiddos. Understand that it may take time for them to fully grasp the concept and develop good habits. Offer guidance and support without pressuring them too much. The goal is to help them build a healthy relationship with money that will serve them well throughout their lives.

Happy compounding!

AND HAPPY LABOR DAY!

Amanda