How to Get Children to Save Money

Does it seem like your kids go through money faster than water runs down the drain? Are your kids always hitting you up for money? When they get money in their hands do they spend it too quickly and then ask you to pitch in a few bucks so they can buy that game or toy that they want? How do you make kids realize the benefits of saving? Here are a few basics on how to set your kids up as good money managers.

Instructions

1. Set an example. Believe it or not, your kids do listen to what you say and, more importantly, pay attention to the things you do. If you are a good saver, then good for you. Most of us realize that saving money is the smart thing to do. Hopefully, you learned your good money habits from your parents. If not, then you probably got kicked in the financial head so many times that you finally learned the hard way. If you aren't a saver, you may need to learn some new habits right along with the kids.

2. Develop a budget. If you already have one that you stick to, include your kids when you sit down to go over it every month. If you haven't already put together a family budget, now is the time to do so. Again, include your kids in its development. Help them to understand where money comes from and where it goes and how fast it goes.

3. Be open and honest about money. Frank and positive discussions about money will help your kids feel more comfortable with this emotionally charged subject. There are two primary places that children learn about money: You and TV. Our education systems don't teach anything about finances and the TV just wants to sell them something. That leaves it up to you to show them the way to get ahead in the money game.

4. Teach them about how money can work for them. Einstein said, and I'm paraphrasing, that compound interest is the most powerful force in the universe. Even simple interest can spark a kid's excitement about money. Set up a small loan to a family member that has a moderate to high interest rate. Let your kids see how easy it is for one dollar to grow relatively quickly. This knowledge can easily be transferred to a bank or other type of account. And make sure they understand how a 20% interest rate on a credit card can eat them alive.

5. Give them some control. Set up a fairly high allowance and let them know that you aren't giving them any more money than that. Help them develop their own budget, making sure to set aside a certain amount every month to put into a savings account. Depending on your family's lifestyle, this allowance could actually reach amounts above $100, but let them do with it what they will once you have a budget established. Be strong with this one. If they go through their money in the first week of the month, don't even buy them an extra candy bar, no matter how much they whine and cry. Whining, crying and throwing tantrums don't work with your boss, do they?

Tips & Warnings

• There are many games and educational tools available that can help you and your kids with the subject. Even games like Monopoly and Life can teach good lessons. An internet search can turn up many good resources.