Teaching Kids To Save By Setting Goals
My kids love to spend money. More importantly they love to spend my money. Money management is a skill that is definitely high on our list of priorities. I believe teaching my kids about saving is an essential life skill that should be taught as early as possible.
Recently my 11-year-old announced that he was getting a car when he turned 17. Really? Intrigued, I asked him how he planned on getting said car and he replied that he was going to save up for it.
Of course, this was the perfect opportunity to give an impromptu savings lesson. I wanted to make sure he realized it was going to take more than a jar full of pennies to buy a car.
This coming from the kid that believes $1 will by him every video game on his wish list?!?
Our Car Savings Matching Agreement
I’ve agreed to go half on a car with my 11-year-old. Yes – you read that correctly. I’ve agreed to match each full dollar he saves from now until his 17th birthday in his car fund.
I did this for a few reasons. I wanted him to know that I took his goal seriously and would support him 100%. I, also, wanted to give him an incentive save. Similar to company-matching with our 401(k) accounts, most people are more likely to contribute if their employer is meeting them half-way.
With 6.5 years to go for his car purchase, do I think he’ll stick with this savings plan? Who knows? He may stop and start. He may just stop. He might surprise the nothing out of me and consistently save and end up with a sweet car once he turns 17. I’m ecstatic that he’s set a savings goal and is excited about working towards it.
How We’re Saving for My Son’s First Car
Typically this is the reaction I get when we start talking money and savings. Once we set a specific goal, both my boys got extremely excited and invested with the savings plan. (I feel for my 4-year-old, when he realizes that he won’t actually be able to drive the car!)
We’ve had savings goal previously for video games, trips to amusement parks, and pizza meals. I really have no idea why this sparked his interest so much more than the other items. The key is finding what makes kids want to save and zoning in on it. Make saving money fun!
Rather than dump all his money into a savings account, we came up with a budget and allocated a certain percentage towards his savings account. He still has to maintain his monthly household contribution. Yes, I make my child pay a bill. He just had to use a video game rental service about 6 months ago when one of his friends started using it. I agreed with one condition – he had to pay the monthly service charge for it. If I don’t receive the money prior to the due date, it gets cancelled for that month. I’m teaching him accountability and responsibility early on.
He’s, also, working on a solicitation letter for family and friends to ask for donations and offer his services for a reasonable fee.
I’m leading by example. I’m open with my savings goals. My children see that I don’t purchase things on a whim. They are aware of items that are on my wish list and my target purchase time frame.
I encourage him to give. I’m a huge believer that by helping others you open the door to receive more and be blessed in other ways that are often more valuable than dollars and cents.
I’ll keep you all posted from time-to-time on how he’s doing with his savings.
How do you encourage saving money with your children?