Teach Your Children How to Save

We absolutely believe that children need to learn how to save money. We are convinced that they will benefit from this lesson their entire lives. There are many ways to make saving a fun activity and set a good example for your children. Here are some of our favorite ideas:

Have everyone in your family toss their loose change into a big "savings jar" at the end of each day. In a few months when the jar is full, help your children take the jar to your bank. Some banks, at no charge, will count your change in a change-counting machine.

Then each member of the family writes down what he or she estimates the total amount of the jar will be. The person who comes closest to the total chooses on which family activity the money will be spent. The family activity could be dining out or a day at an amusement park. The purpose is for everyone to benefit from the time together, since everyone put his or her change into the jar. You can also use the funds for long-term investment and growth.

Make saving a part of everyday life. When your children are young, they can save some of their allowance in their piggy banks and set up lemonade stands, baby-sit and mow lawns. They can learn early to comparison shop for everyday items such as clothes, food, and music.

When they are a little older, your children can open up a savings account at your bank and watch the balance grow. They can mow lawns, organize neighborhood garage sales, and get summer jobs at stores or summer camps. To give them incentive to work and put money away in their savings account, you may offer to "match" their funds or reward them when they reach a savings goal. This way, they can experience the satisfaction of selecting and buying larger items they want, such as technology, cars, and auto insurance.

Help them choose their college and their career. Make no mistake, the colleges your children choose will directly affect you and your children's financial situation for years to come in many ways. What are the tuition, room and board, and travel costs? Does the school specialize in their chosen career? While they research these questions, your children can "visit" more colleges remotely by viewing hour-long video tapes of college tours, available online.<

Colleges get more expensive every year. Young people incur some of their deepest debts while in college. However, you do not want your children to be burdened with debt before they even start their professional lives. Help your children understand that they need to help with the expense of their education. Explain to them that their career path will affect their income and standard of living. Student loans take a long time to repay, so they may need to apply for all available scholarships and get a job while going to school. You can get help with college tuition through the Federal Student Financial Aid Information Center www.studentaid.ed.gov (800-433-3243). If you have student loans, perhaps you can consolidate them. Visit www.loanconsolidation.ed.gov.

Be the role model that they need. Our children are always watching their parents. Parents need to do their best to be good models of how to manage money. In more than one way, setting an example for good money management is a "priceless" gift that our children will benefit from all their lives.

(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)