Mom, You Want Me to Put My Money WHERE?

by Stacy Levin 1. June 2012

Let's face it - putting money in a savings account isn’t exactly the most exciting thing to do with your hard-earned cash, even for adults.  If you find it difficult to motivate yourself to save, imagine how kids feel about saving.  Here are some tips on how to help motivate your kids to save money and become financially responsible individuals:

1) Give your kids a weekly allowance and help them set a budget.

Have your kids agree to an amount that they should save weekly and the amount they can spend on whatever they want for the week.

 2) Give your kids a reason to save.

Don’t just make your kids save money for the sake of saving money or “because you told them so.”  Help your kids set goals for themselves.  If there is a toy your child wants, make him or her earn it with his or her savings.  Or, find a charity that your kids would be interested in helping, and have their savings go to that charity.

 3) Use visual aids.

Visual aids are great tools to use for young children to help them see the benefits of saving.  For example, give your kids two transparent piggy banks or jars, and have them put the agreed upon amount of allowance in these “savings accounts”.  Pay your kids a set percentage of interest in the second piggy bank or jar.  Your kids will be able to literally see their savings accounts grow, and they will be able to see the money they earned by simply putting their money in the “bank.”

 4) Open a savings account.

Once your kids are older and understand the concept of saving, open a savings account for them at your local bank.  Take your kids to the bank each week to deposit their money rather than doing it for them, and have them look at their deposit receipts and bank statements so they can see how their accounts are growing.

5) Match your kids' savings.

Similar to paying your kids interest, you can match the amount, or a percentage of the amount, that your kids put away.  This technique will help your kids learn the benefits of 401(k)s, as many employers match a portion of their employees 401(k) contributions.  Many first jobs teenagers get do not have 401(k) benefits, so you can provide this service for them yourself.

6) Set a good example.

Whether you like it or not, your kids are constantly observing you.  Use this to your advantage by making wise financial decisions.  If you don’t have the greatest history of financial management, now you will have the extra motivation of not only feeling like you need to be financially responsible for your own sake, but also for your children’s sake.

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