Children Model Their Parents

Psychologists have long told parents that children will model their behavior into and through adulthood. For this reasons, it is extremely important that parents who want their children to save practice this behavior themselves. While a parent certainly does not have to share all of the financial circumstances of the family, it is a good idea to let them see that there are specific savings structures in place and that some of the income is placed into these structures on a regular basis. When a parent says “no” to a child’s request for an expensive item, it is perfectly appropriate, moreover, for the parent to deny it initially, stating that money will have to be saved for such a purchase. Growing up in a household that regularly saves will cement this as a value as the child turns into adulthood.

Use Allowance to Teach Saving

Most children will spend an entire allowance if allowed to do so. But allowances can be used as a great training tool for saving. When the allowance is given, ask the child to set aside a specific percentage for savings, and to plan for a purchase down the road with that savings. This can be a natural occurrence, for every child desires some new toy or piece of sports equipment. Saving his or her money will demonstrate the lesson of deferment of gratification, a lesson that is sorely lacking in today’s society. As the child moves into the teenage years, the desire for items continues, and often the items are much more expensive. It is perfectly appropriate to begin a savings plan for a car, for example, and to offer to match whatever the teen saves toward this purchase.

Teens and Budgets

Many teens have part-time jobs and/or continue to receive allowances as they proceed through high school. Plans should be developed to teach budgeting and saving, and the teen should be given more responsibility for his or her expenses. It might be wise to consider giving a teen a monthly rather than a weekly allowance, along with some budget training, determining an amount that will be placed in a savings account and not touched. This savings is for long-term growth, so that funds are available as the young person goes into college or the world of work. Suggest that a portion of a large gift of money, for birthday, Christmas or graduation also be placed in savings. There will be less resistance to doing this if savings has been a practice from a young age.