Love may be all you need, but the world runs on money. From an early age, your child has the opportunity to watch you make fiscal transactions at everyday places: the bank, the grocery store, the gas pump, the ice cream parlor, and even the gate to enter a National Park. From the time they are 3-4 years old, when they truly start becoming curious, it’s important to take the time to explain to them what you’re doing with money. Whether you are using cash or debit/credit cards, this is a great introduction into the functionality of your funds. But, what else can you do to help them understand money, and how it can work for them?
Start with the Good Old-Fashioned Piggy Bank
In year’s past, the money in some piggy banks could only be retrieved if you smashed the bank open. You had to be very sure you wanted the money you had been saving, considering the consequences of breaking the bank. You could only get a sense of how much was there if you counted it as it went in or were particularly good at determining coin weight. That is certainly still an option, but these days they have all different styles of piggy banks that will help your child get excited as he sees coins piling up inside. Saving money helps children hone their delay of gratification skills. It shows them that they have choices on how to spend the money they have saved.
Give them a Variety of Chores, Some for Pay, Some Not
Growing up in a family, it’s important to remember that some tasks are done purely for the families’ benefit. These tasks might be activities like setting the table, raking leaves, shoveling snow from the driveway, or feeding the family pets. Offering additional tasks that they earn money for doing, like changing the cat litter, mowing the lawn, cleaning their room, and watering the garden give them incentive to save. Paying for only some of the chores will help them feel a balance between the sense of belonging to a community, the family, and being able to earn money toward something they would like to own. Children learn the value of money more profoundly when they have earned the funds to pick consumer goods that they desire such as a smart phone, video games, an electric skateboard, or designer athletic shoes.
Beyond the Piggy Bank
While it’s true that most of us have a ‘piggy bank’ in some form even as adults, teach your children about the diverse ways one can save:
- Open a savings account and then a checking account when they get older to help them manage their money wisely.
- Put money into a CD account (Certificate of Deposit).
- Open a 529 College Savings Plan for them and encourage them to add to it regularly.
- Pay them their allowance via customizable Visa Gift Cards. The beauty of paying them with a gift card is that you can personalize it with a favorite picture of a pet or the family, or whatever it is that they love. You can add text like “Great work!” or “Job well done!” People are generally more resistant to spending card funds than actual cash, so it can enable your child to feel the power of saving even more powerfully.
- Teach them to invest in the stock market through one of the dozens of companies like Acorn and Robin Hood that let people invest money in small amounts. Build enthusiasm for savings, seeing growth, and following the stock market with little risk.
The Lesson of Paying for Themselves
Once they are old enough and they have some liquidity to their name, find your comfort level in having them pay for some of their privileges themselves, or at least a fraction. Do they use a cell phone? Do they drive the car? Ask them to contribute some or all toward their cell phone bill, fuel, car insurance and/or even car maintenance and repair. The sooner they are faced with these bills, and the expectation of contributing, the better off they will be when they move out and are on their own.
Saving for that Inevitable Rainy Day
While people appreciate the sunshine, they must endure a little rain. Although mindfulness and living for today may be a popular philosophical and spiritual theory, it will not pay for lost glasses, or a hacked and virus infected computer. Helping your children open a separate savings account will remind them that emergencies will and do arise, regardless of the number of clouds in the sky.
Inspiring a Positive Work Ethic
There will always be chores to do at home. The real savings will come when your child acquires their first job. Whether it’s at the local fast-food place, the library, or a store at the mall, continually encourage your child to be punctual, polite, and to give the job their all. A positive attitude will take them far, and a positive work ethic will take them further.