Have you thought of talking to your child about money and how one can save it? It is individual’s choice when and how to implement it. But the sooner parents start taking advantages of everyday teachable money moments and start to teach kids the value of saving, the better off our kids will be. Today kids are smart enough to know where their parents get money – the ATM, off course. Understanding that parents must work for their money requires a more mature mind. I remember when my daughter was 4 or 5, she once said there is a factory which gives us Money and we use that money to buy things..:). And I guess, most of the kids think this way. Even in stores, they see us picking the stuff we want to buy, swiping our credit cards, and taking the stuff home…done. They see us spending but what about the saving part? Will they understand the value of saving?

Yesterday, my daughter did her first saving and she is very happy about it. She moved one step closer towards saving. Now a days, with the increased usage of Credit Cards, we do not get to see the money in currency form. And I doubt our kids would ever see the real currency the way we did. It is definitely more convenient but by using Credit Cards, we do not see the money leaving our pockets. To teach our daughter the concept of saving & spending, we decided to give her dollar bills as an allowance. It is a very small amount (but for her it is something special) that she can either save or spend.

We went for buying some regular stuff. She told me in advance that she would like to get something for her. I was just observing her at the store- the way she was picking up the things she liked, and then checking the price. During this whole process multiple expressions ran through her face – hope, happiness, surprise, excitement, sadness.  Then she finalized a Hello Kitty Box, compared the price with the money she had and we went to check it out, the lady returned her remaining amount. My daughter was surprised and happy. Why? She was lucky, that item was on sale so she saved $2.75..). While coming, back she had a proud look on her face & simply admiring her first independent purchase.

So, I decided to write these 5 simple ways to teach kids the value of saving:

 

 

• Teach them to wait before buying:  Explain your kids the value of delayed gratification. Curbing impulse buying goes hand in hand with teaching delayed gratification. Kids should know that going into a store doesn’t mean that they will be getting something. For example, you have to get a birthday present for a friend. And you kiddo gets carried away by some toy on the shelf. What will you do? Will you buy it? No..right?

I read a beautiful example for this called ‘Stanford Marshmallow Experiment’ led by a  psychologist & professor Walter Mischel. For this kids were been offered one reward (say a marshmallow) and were given the option of either to enjoy it immediately or wait till the end and get more rewards (may be more treats). Later in the follow up visit with the parents of these kids, researchers found that those who chose to wait for the reward did much better in their lives at later stages. To read more about this experiment here is the link.

 

• Teach them to learn to make choices about how to spend money: It is important for you to tell your child the importance of making wise choices, because once you spend the money you have, you don’t have more to spend. For this, you can give your child small amounts say $2 or $6 as an allowance, have them make choices, within the parameters of what you need.

 

• You set an example:  You attitude towards money, the way you handle it makes an impression on your children. Before you go shopping, make a list; outline the stores you are going. You are teaching them not only to plan their purchase but also how to manage time.

 

• Tell them the difference between needs and desires/wishes: This sounds hard. Isn’t? It is hard even for grown-ups too. Tell your child that just because you have money and you can afford,  it doesn’t mean that you have to  buy it. A need is something you have to have, something you can’t do without. A want is something you would like to have. It is not absolutely necessary. Let them answer simple question – Do you really need it? (Need), or You want to buy it because you liked it? (Wish).

 

• Show them saving is a super cool idea: Your child want some toy/dress? But the price is exceeding their budget (i.e allowance). Solution for this is to wait. And when she has collected enough, take her to shop, let her pay to the cashier herself. She will never forget this feeling. That’s exactly what we did yesterday. I gave my daughter the money, she paid it to the cashier.

 

My daughter’s first saving inspired me to write on this topic. I will keep on adding more points to the list as they come. If you have anything to share please go ahead and leave it in the comment box. I will add them to the post.