Kids Savings Tips – Part 2Posted on April 23rd, 2012 under Wealth of Advice
By Francisco J. Colayco
Last week we talked about having your 3 or 4 year old actually hold money even if he does not know what it is really all about yet. Evonne Lack in “Top 7 ways to raise a money-smart kid” support the principles in my book “Money for Kids” through more stories and quotes that I want to share.
“2. Dispose of “disposable thinking.”
This is especially true in America where many things are disposable especially with the fast food culture. Unfortunately, we are quickly following but perhaps because of less money available, we tend to reuse packaging more.
But kids see and follow what grown-ups do. I agree completely with what Evonne Lack says:
“From broken toys to outdated TVs, almost everything gets tossed in our culture. By teaching your child the value of things, you set a cornerstone of financial literacy. ‘Kids can learn that possessions deserve our care. If your child throws a book, explain that throwing books can damage them, and that treating them gently helps them last a long time,” says elementary teacher Laura Gerrity.
If something does break and your child cavalierly says, “It’s okay, we can just get another one,” take advantage of the teachable moment. Gently explain that replacing it would cost money, and that you’ll need to decide whether spending that money is a good idea. This may lead into an interesting discussion of all the other things that cost money, such as food, rent, and gas.
When your child outgrows some clothes, ask her to help you wash and fold them so they can be passed along to a smaller neighborhood kid or to a family shelter. Shifting from a “break it, chuck it, replace it” attitude to a “waste not” attitude can help even young children build a foundation for sound money habits.”
“3. Encourage delayed gratification.”
Instant gratification is one of the culprits that I specified in my book Wealth Within Your Reach on why people are not able to save. This is true with adults and it starts in childhood. Kids are naturally impatient and you have to teach them how to wait. This will surely develop in them values that will help them in many facets of adulthood and in managing their personal money.
Don’t immediately give your child what he asks for. Teach him to wait and for special “wants”, suggest that he put it in his birthday or Christmas “wish list. “Creating opportunities for delayed gratification is one of the best gifts parents can give their children,” says Sharon Lechter, coauthor of Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money.
As they grow older and have learned to delay their gratification, you can start teaching them to save for things they want. You can teach them to put aside part of their allowance or do extra chores to have more money and then match or double their savings.
More next week.