Are you hesitant in teaching kids to save money because your own savings account kinda sucks? Don’t worry. You’ve got this, Mama Bear.
Do you feel less than confidence about teaching kids to save money because your own savings account, well, sucks?
You’re not alone. The Personal Savings Rate in America hovers generally around 5%, which means that most Mama Bears don’t have any savings at all.
But how are you supposed to teach your child to save money in a “do as I say, not as I do” kind of way?
Hi, I’m Amanda L. Grossman from MoneyProdigy.com where I teach kids aged 8-13 how to save money through educational adventures, like the Mt. Everest Money Simulation.
Kids save money — it doesn't have to be a pipe dream. And I’ve got 3 strategies to help you teach your own kids to save money despite the $500, $0, or even negative savings account balance you may have. So, you can check your money hang-ups at the door. Seriously.
Strategy #1: Put them in control of some money.
Here’s the thing: research shows that children who grow up money-smart didn’t get that way because their parents are amazing with their own money. The number one reason why they got that way is by being allowed to manage their own money, make mistakes, and then learn from those mistakes.
This means that even moreso than the next two strategies, your number one way to ensure a money-smart kid is to actually give them money to handle.
Pssst: But that's not actually entirely enough. You need a full-blown Kid Money System. Don't fret, I've got a 48-hour Kid Money System Makeover Challenge you can join for free. Get yourself a system, stat!
Strategy #2: Fake it ‘Til You Make It
It turns out that modeling good financial habits is really important. In a T. Rowe Price’s 2017 Parents, Kids, and Money Survey, they found that parents who are more money-savvy (which is measured by them having 3 different kinds of savings – retirement, emergency fund, college, savings for a goal, etc.) have kids who are 12% less likely to spend their money as soon as they get it, and 9% less likely to lie to their parents about what they spent their money on.
Look – you’re likely not saving the amount of money you’d like to each week, month, or even year.
But that doesn’t mean that you can’t model good financial habits for your kiddos to pick up on.
Here are some ways to fake it ‘til you make it, or rather model good savings behavior even when you’re not where you want to be:
- Make Physical Cash Deposits: Even if it’s just $10 – because honestly, your kid doesn’t have to see how much you are depositing into your savings account, just that you ARE depositing money into your savings account.
- Set Up a Change Jar with a Specific Goal: Maybe change jars aren’t exactly your thing. But they’re a great visual to share in your savings process. So, set up a savings jar and write what you want to buy with the money on the outside. Empty your wallet into the change jar on a consistent basis. Don’t be surprised if your kiddo starts their own!
- Set Up a Household Skim-off-the-Top Rule: Decide today that 10% or 5% or 50% of all extra, non-paycheck money that comes into your household will be put into savings. And then actually do it, in front of your child.
Strategy #3: Mine those Money-Story Gems
You’ve had money experiences – both successes and failures – you’ve been in the banking industry for some time now, you know how this money thing works.
Maybe you don’t exactly get investing. Maybe you’re not even contributing towards a retirement account at the moment.
But your money past is ripe with stories and dialogues and teachable moments to have with your child that will change the course of their own future. So, use them!
Follow these strategies, my dear, and not only will you raise a money-smart kid, but your own savings account will probably grow!