Teaching a Child to Save Money
An interesting read on how one person taught his children about money:
“As a small child, my parents would talk to me about saving money but no strategy complemented the narrative, making the end result more coercive than cooperative. When my own children reached ages 5 or 6, I embraced a more strategic approach.
“When I asked my children whether they thought the day would come when they would want to buy a car, the answer was always a resounding yes. Even at a young age they wanted a sports car. When I asked how they thought they would save enough money, silence would prevail, giving me the opportunity to make my proposal.
“‘What would you think if every time you placed a dollar, 10 dollars, 20 dollars or 100 dollars into your bank account, I would match it dollar for dollar? The only condition is that you keep it saved until at age 16 and you want to buy a car. Additionally, if you save at least $6,000 by age 16, I will match it again – so that you would have $12,000. Do you think we should start saving now for a really nice car?’ With excitement in their eyes, they answered ‘YES’. They now had a purpose – one that they controlled. This worked on every one of my three children, and even friends’ children whose parents replicated the strategy.
“Any time my children received money, there was little need to coerce them into saving. They wanted to see the dollar-to-dollar match and watch their account grow. The oldest was always the encourager. ‘Save your money. You’ll be glad you did!’
“To this day, all three children are big savers and all three entered their companies’ 401(k) plan the day they began work at age 21. I guess the idea of saving, accompanied by a company match, was already ingrained. They couldn’t imagine passing it up. At age 41, my oldest has saved more than $250,000, and my youngest, age 30, has just passed $100,000.”
What’s your “encouragement” strategy for saving money? Get one and teach it early.