By:Debby Hohler, Director, Corporate Communications, Sallie Mae
You understand the value of saving. But what about your children? What’s the best way to encourage them to save—and make it fun at the same time?
For children who aren’t old enough to get an allowance, start with the basics. When they get money for their birthday or a holiday, you can help them understand what money is:
One way to make things fun is to use Big Start (iPhone) (Android), a free downloadable app designed to help children up to age 6 learn about money. It features a read-along e-book and money-related games to entertain and teach. It also includes an interactive "What do you want to be when you grow up" section that lets you upload your child's picture into an avatar of an astronaut, farmer, vet, and other professions.
Some kids like to save all their money; others can't wait to spend it. Here's a trick for helping them see that a give-and-take approach is a winner. Take a paper plate, divide it into thirds, and have your children fill in the pie slices with drawings and pictures from magazines. Ask them:
Then, take three jars and label them “Save,” “Share,” and “Spend.” Talk with your children about dividing their allowance into each jar. You can also make a bank "passbook" out of a notebook so they can record how much they have saved, shared, and spent.
And don’t forget to reward good saving behavior. If possible, match the amount they put into the jar labeled “savings” — kind of like a family 401(k). Matching the amount shows your commitment to your children’s future and provides an opportunity to discuss saving versus investing.
Can’t match the savings? Try non-monetary rewards—toys, stickers, trips to favorite places—to reward good saving behavior. The key is active participation and providing positive feedback whenever possible.
The save/share/spend strategy that’s outlined in Big Start (iPhone) (Android), can also work for older children. But here the motivations for saving are more complex and the opportunities to grow the money are more plentiful.
By laying the groundwork for saving early, you can provide your children with a positive, life-long habit — one that can put them on the right path to a rewarding financial future.