Teaching your child to save money.

[Dancing Fire]

my older daughter became a saver once she started working full time.i advised her to max out her Roth IRA every year.

 

[armywife13]

i advised her to max out her Roth IRA every year.

Wise advice. When my husband and I were in the position to, we did that immediately.

 

[zoebartlett]

My teenage DD picked this up, and will proudly proclaim "I've got a coupon!" She won't buy anything at full price, and will wait for sales on jeans (seriously, $120 jeans?) or whatever she wants.

This made me laugh because it reminded me of my dad. Whenever we'd go to McDonald's or a convenience store when we were younger, he'd pull out all this change from his pocket and see how much he could use up.He must have used cash as well, but I just remember being so embarrassed at how long we'd have to wait at the counter while he counted a zillion coins. My dad also loves coupons. LOVES them.

 

[Haven]

My teenage DD picked this up, and will proudly proclaim "I've got a coupon!" She won't buy anything at full price, and will wait for sales on jeans (seriously, $120 jeans?) or whatever she wants.

This made me laugh because it reminded me of my dad. Whenever we'd go to McDonald's or a convenience store when we were younger, he'd pull out all this change from his pocket and see how much he could use up.He must have used cash as well, but I just remember being so embarrassed at how long we'd have to wait at the counter while he counted a zillion coins. My dad also loves coupons. LOVES them.

Your dad sounds like my "second" dad. (Very close family friend.) He used to take the four of us girls out to McDonald's and force us to split two kids' meals. He also once got kicked out of an all-you-can-eat sushi buffet for taking the fish off the rice and eating only the fish. His defense was that he didn't want to fill up on rice because it's so cheap!

 

[NewEnglandLady]

Lke a lot of PPs have stated, I think setting an example is the best lesson. I grew up poor, but my parents always stressed saving. When I was a kid, I was always embarrassed by our vehicles, but my parents taught me to always pay cash for your car. My first car cost me $400 when I was 16 (I worked full-time during the summer). I've still never had a car payment. I also remember the day they paid off their house, we all went out to dinner to celebrate. Which was a BIG DEAL because we never ate out.

I do think kids pick up on their parents spending habits, for better or for worse. I plan on teaching our kids the same things my parents taught me. And not handing anything to them on a silver platter. Though I worry about my husband doing the same!

 

[zoebartlett]

My teenage DD picked this up, and will proudly proclaim "I've got a coupon!" She won't buy anything at full price, and will wait for sales on jeans (seriously, $120 jeans?) or whatever she wants.

This made me laugh because it reminded me of my dad. Whenever we'd go to McDonald's or a convenience store when we were younger, he'd pull out all this change from his pocket and see how much he could use up.He must have used cash as well, but I just remember being so embarrassed at how long we'd have to wait at the counter while he counted a zillion coins. My dad also loves coupons. LOVES them.

Your dad sounds like my "second" dad. (Very close family friend.) He used to take the four of us girls out to McDonald's and force us to split two kids' meals. He also once got kicked out of an all-you-can-eat sushi buffet for taking the fish off the rice and eating only the fish. His defense was that he didn't want to fill up on rice because it's so cheap!

Hahahaha... Yeah, they sound alike!

 

[distracts]

Okay sorry this is an epically long post.

I did not learn until late HS/early college... my parents tried teaching me but their efforts were in vain until that time. What they did was give me $150 allowance a month, deposited into a checking account to which I had the debit card (I also had a savings account - these were very nice things to have because I don't know that I could have ever learned without being able to always check the online transaction summary and stuff), to cover free spending, gas for my car (this part got upped a little when I went to college because I drove a lot more), and dinners out with friends. They didn't force me to save a certain amount, but made me budget out the month. If I filled up my car twice a month, I could go out with friends every week and have X amount left over for books (the main thing I buy). My parents covered the basic clothing necessities, but my mother doesn't really "get" the importance of clothes so to her the basics is like four pairs of pants and five shirts and two dresses, or something, I don't know, so I had to save up for clothes if I wanted them. They started all this when I was about 14 and I didn't stop spending every cent that I had immediately until I was 17, and didn't get good at saving until I was about 21 and had additional money. I worked part-time in high school for just about 10 hours a week, but not again until junior year in college. My brother, on the other hand, was born a miser and has saved practically every cent he got his whole life and started part-time jobs as soon as he was able.

When I was younger, my parents DID try to force me to save and then never take out the money. IMO this isn't realistic as I think it's harder for younger people to understand abstract, future goals like "retirement." Like I wanted to save up for a new bed, but when I had the amount it cost, my parents said, "wouldn't you like to save for something bigger?" and I was just like, "no, I want a new bed!" and then there was tantruming and it was awful.

I also don't know how you could possibly do this with less than $100. If anything they would want in the normal course of things (books, movies, video games, etc, a couple of these a month) could entirely wipe out their monthly allowance in one go, it just isn't going to teach them anything about saving. They have to have an amount where they can easily put away between 20-50% (since we're talking small portions here) and still have enough left over to buy one or a couple of things. I would pay monthly or biweekly rather than weekly.

Now I am finishing college and just got a part-time job and when I'm working I save at least half of my paycheck, save for the first one which is all for blowing on a reward for having a job. My housing/food expenses are covered but everything else I have to pay for. Since working in the summer will just get me several thousand dollars, my savings isn't forever savings - last year it was for a new laptop and this year it is for my fiance's wedding ring.

My mother has said she's impressed with how well I spend and budget my money now because she thought I'd never learn. I said I was glad she didn't reveal her lack of confidence in me until AFTER I had learned, which I thought was hilarious but made her feel like she was a horrible parent. But she wasn't, because she did help me learn much better money skills!

When I started college, my parents had me sit in on one meeting with their financial planner just so I could see what it was like. Gave me a heart attack about saving for retirement when I realized just how much I would need to save up!

I will also say what NOT to do: Don't give your kids conflicting information about the finances. My parents did this and I know it screwed me up with money in some ways, because my mom was always saying "Oh, there's no money for anything, we can't go out to eat or on vacation, we need to save, we have no money!" and my dad was always, "We have plenty of money! I'm a doctor! Let's buy a fifth car!" and so it is really, REALLY hard for me to comprehend not having money because if my parents' huge-house, five-car, millions-saved-for-retirement lifestyle is "no money," then... I don't know. I don't know how to explain it but it did one over on me. I just... it made me think that no matter how much you don't have money, money will somehow suddenly appear to make everything right. I definitely have way more screwed-up notions of money than most of my friends, except my friends who grew up in situations similar to mine. And it does NOT help that I am going straight from being provided for by my parents to marrying my fiance, but what am I supposed to do? Not marry him? I don't know. I worry about my grasp on money issues a lot.

 

[Lotus99]

I'd say get the children their own building society accounts and get them saving something each week or each month. It's only if they're responsible for their own money that they'll start to understand how it works.

If you want to start savings accounts for them for later in life, I'd advise setting up separate accounts they don't have access to. Sign the accounts over to them or give them the money when the time is right and you know they'll be responsible with it.

 

[partgypsy]

I think there are some things you can do, but again as Kenny would say "kids vary". Some will learn how to budget and some just don't seem to have that temperment. And it can change. My sister used to be like me and be extremely frugal (know how to live on nothing) but now spends money like water.
The best lesson is other than paying for the basics and a few extras, to give them an allowance and let them figure out how they want to spend the money, so they can learn cause and effect. If you spend your money on stupid stuff, you won't have it for something that you might want or need more. Most kids, when its their money are much LESS to spend it on a toy or treat versus when they know you are paying for it.

My mother is kind of a tightwad, I am too, so is my oldest DD. She was born that way. She gets an allowance that is automatically deposited in an on-line checking account. She also gets small cash gifts from family members for Christmas, her birthday. Since I thought she was mature enough for the last couple holidays I asked her if she wanted the cash or for it to be deposited into her college savings account. Other than $40 for a gift she wanted and didn't receive, she put the rest in college savings. She enjoys seeing her balances more than a particular toy!

I had a savings account for money I made when working during jr high and high school. I basically never took money out of it even though I didn't really have an allowance. It really came in handy when I needed to cover living expenses in college, and to travel abroad for a semester.

After college I worked a job for 1 1/2 years and was able to save 7K. Though I ended up spending some of it when there was a gap between working and grad school, the majority I still had to fund a move for grad school. Though I didn't really think about it at the time, I am glad that other than tuition costs that my scholarship didn't cover, I was pretty much financially self-sufficient college-on.

My youngest is 5 and still doesn't "get" money. But as time goes on we will also give her an allowance and have these kind of discussions with her.

 

[Lady_Disdain]

As a child or teenager, I never had access to the family budget. I didn't have a clear idea of how much my parents earned or household expenditures. This never bothered me and it still doesn't. I was certain that we would have a roof over our head, food to eat and school supplies. If the year was a good one, we might have one or more large trips. I never took gifts for granted, etc.

However, my parents did, indeed teach me a lot about personal finances. I started getting pocket money at around 6. I would save my money, buy little things and give gifts to my family (both my sister and I spontaneously started spending our own money on gifts at that age - if the adults bought gifts for each other and us, then so should we, of course). At 8, my father sat down with us and negotiated an allowance progression, based on outings, books and CDs. For example, at 12, we would have a cinema outing every month (movie tickets and a fast food meal) while, at 16, we would get 4 cinemas outings (assuming that not all of them would be movies, but equivalent activities). At 12, we would get 2 YA books a month, at 16, 2 adult books. This way, we could always calculate a fair allowance, despite numerous moves and hyper inflation.

My father was always open to negotiation (and he was a tough negotiator, which I appreciate today), as long as we could present good arguments. When I asked to increase the book allowance since I read so much, my father countered that, in that case, I had fewer opportunities to go to the movies, so we could increase the books but cut back on the outings (yep, that would not work out in my favour). On the other hand, my sister successfully negotiated an allowance increase, to cover clothing (my parents had always paid for our clothing, but my sister was rather fashion conscious and wanted more clothing than my parents thought necessary), so she got more money monthly but no more clothing purchases. I eventually realized this was an excellent move, as I could divert clothing funds to books (yep, ratty tshirts but more books for me - my parents rolled their eyes but held their peace, as it was then my decision).

My mother was "treasurer" and was the one who showed me how to save my money to buy more expensive things. She would show me how to save half of my money so I would still have some to spend in the present and more in the future, and she opened my first savings account. She also taught me about borrowing money. Once, when we were on vacation, I fell in love with a typical local doodaa. Since this was pre internet day, I couldn't just go home, save up and order online. So she offered to advance me the money and I would pay her $x/week for 8 or 10 weeks. And she did, indeed, ask me for her money every week. Not paying the debt was unthinkable.