“Don’t stand on the dog,” is just one of the many, many things I never imagined having to tell my children. But early in parenthood, it began dawning on me that kids may actually need direction in areas I considered common sense, like having to put the kibosh on Irish Setter surfing.
When my wife and I began teaching our kids simple money management skills, we quickly realized that we were raising genius level spenders. It was the “saving” part that was going to require a little special education.
Short term savings was not too difficult to relay. You know, wait a few days or weeks and you will have saved enough to buy (fill in any unnecessary item that a child is convinced supplies them the will to go on). They fought us a little, but they could see the results soon enough.
The next challenge was long-term savings. Here we had to reach into the future and try to put a fun spin on relatively dry source material. Really, what child is impressed by knowing they are saving money that will be handed over to a university or a landlord or a car insurance agent. It’s a tough sell, but we started early and were firm enough that the concept was normalized in their developing minds.
Finally, we came to unplanned/emergency savings, depending on your comfort level of drama. To one of our daughters, most anything unplanned was classified as an emergency (frizzed hair, daylight savings time, the weather…), so, in our world, this was to be the Himalayan Adventure of savings training. Now, understanding that there are very few actual financial emergencies in the life of a child, I figured we’d just focus on the unplanned events.
Here are a few tips for helping your kids get started with unplanned savings:
- Make it easy.
A child is much more likely to save if it takes little effort. This could be a bedside piggy bank for a kid in pre-school, an electronic allowance transfer for a middle schooler, and an automatic withdrawal for a teen.
- Make it relevant.
Get started with a goal that’s actually fun. For the youngest savers, this could involve a small purchase, like having a few dollars saved for a friend’s last-minute ball game where they may want to buy themselves a hot dog. For older kids this could be a small stash to cover an unexpected concert or road trip with friends.
- Make it accessible.
Finally, help your child decide on a reasonable amount, This could include a separate piggy bank or accounting for the young ones, and, for the older kids, a separate bank account or even an emergency/unplanned debit card. (ECCU will have more about this option in the coming months!)
Also consider a non-restrictive policy to access this money—mainly because the real point is to teach them to save. Teaching them what to do with the money they saved is a whole separate issue (and blog post) of training stewardship and responsibility.
Meanwhile, setting goals will help them think well beyond the moment and build wisdom well beyond their years. And, financially speaking, consistent goal setting can help anybody achieve a greater level of financial freedom.
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