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Saving Money
Saving money is hard. And for a lot of kids,
it's really hard. Most kids live in the
here-and-now and the thought of putting money aside
for later spending makes no sense. So we need
to step in and offer kids reasons to save and
provide little incentives along the way until saving
becomes a healthy habit.
A KidsSave icon
 appears next to the items where
KidsSave, a kids' savings and money management
software program, can help make the tasks easier.
 Reasons
to Save
Has your child ever come to you with something that
she's just got to have but has no money to get it?
That's the perfect opportunity for you to introduce
the idea of a reason to save. Saving money can
help us get the things we want.
Even better, saving money teaches kids to delay
gratification and live within their means.
These are important life skills that can help our
children grow to be independent, responsible, and
productive adults.
It all begins with creating a personal financial
goal.
Walk your child through the steps
necessary to create an achievable goal. A
simple chart like the one below is a good place to
start. Keep an eraser handy, though.
Kids are pretty optimistic and although we want to
encourage optimism, they often don't realize just
what's involved in coming up with a plan that's
realistic. Seeing the numbers may motivate
them to do a few extra jobs around the house!
The very first goal you set up with your child
should be easily attainable in a relatively short
period of time. This will increase the chance that
she will want to set up another goal, at which point
you can increase the time and amount she needs to
save. And remember, sometimes goals need
revamping along the way. There's nothing wrong
with that as long as your child is making an attempt
to achieve her goal.
| Week
Number |
Amount
Earned Each Week |
Total
Amount Saved |
| 1 |
$6.00 |
$6.00 |
| 2 |
$6.00 |
$12.00 |
Incentives to Save
One of our goals as parents is to instill the habit
of saving money so that our kids can carry this with
them into adulthood. Putting money aside is how they're going to
come up with the down payment on their first house
and have enough to live comfortably when it's time to retire. But,
as mentioned above, kids don't often see the value
of saving. To help establish this
important life skill we sometimes need to give them
little motivators. These motivators come in
the form of matching funds and interest.
Matching Funds: Match
their savings dollar for dollar, or quarter for
dollar, or whatever fits your budget. What kid
doesn’t like free money? Okay, so it may not be
free to you, but the saving habit you are
establishing now will save you a lot of money
later on.
Interest: Interest from a
child's savings account is pretty nominal.
It's hard to get too excited about twelve cents,
even for a kid. So give them interest on their
savings by customizing the rate so that their
account can grow faster. This is another example
of “free” money and over time will introduce
them to the power of…
…compound interest. Einstein
calls compound interest the eighth wonder of the
world. And for good reason. Over time even small
amounts of money can grow into lots of money. A
good way to help kids understand this is by
having them “see” their money grow visually. Any
chart or spreadsheet program will do the trick,
or for something a little more kid-friendly you
can use a kids’ savings program like KidsSave.
And, finally, help your kids open a savings
account at a bank or credit union. Kids love to
act “grown-up” and tapping into this interest
may be the spark that ignites their life-long
saving habit. Not to mention that it’s harder to
spend money you don’t have easy access to!
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