Saving For "The Future"

Teaching children to save money is a tough balance between letting them know that some little niceties in life are alright but to splurge out of control is not. Here are some ideas to help small children learn the value of a dollar.

1. Take them to the grocery store with you. Give them a set amount of money and a calculator and have them plan a meal with it. For instance, give then $7 and ask them to buy everything they would need for Breakfast. They can then pick up a box of cereal for $2.79 and a gallon of milk for $3.05 and 3 bananas for $0.58. Make sure they understand the importance of leaving some for tax. You don't need to teach them right away how to calculate tax but make sure they know to leave some over for tax. This is a simple way to teach children at a very young age. As soon as they can add and subtract they can start doing this.

2. Have a chore chart that they can use to earn money. Then have them pick something that they really want and have them do chores to earn the money to buy it. Start with something small. A $0.99 Hot Wheel or Necklace. Something inexpensive and easily attainable. The key is to start small and move up so they gradually learn to save and it doesn't become overwhelming and seem unreachable to them. For instance, if you decide to start them off saving for a Nintendo Wii that will take them 2 years to save for, they are going to give up. But if the first thing they are saving for is a Toy Car that only takes them 3 days to save for then they will be excited to buy it and then to start saving for something else, seeing how easy that was.

3. Open a savings account for each and every one of your children. Let them know that it's there and have them commit to a percentage of their "income" that will go into their savings accounts. I did not give my children a choice. I made the decision, but it would have been better if I had sat down and discussed it with them, involved them in the process of the decision. We put half of everything they get into their savings accounts. Birthday, Christmas, Chores, you name it, half automatically goes into their savings account. The rest they can save in their piggy banks for the toys they want.
I have not decided yet when exactly they will get access to their accounts. It may be when they decide they want to buy a car, or when they go off to college. I am not sure right now, but they know how much is in there and they get to watch it grow which is very exciting for them.

These are just a few options and ideas you can use to help you kids learn to value financial independence and stability.