Encouraging Kids to Save Instead of Spend

If you’re a parent, grandparent, aunt or uncle, you’re probably well aware that kids are terrific at spending money. Where they need help is in saving it. With fewer than 20 states requiring a personal finance course for graduation and many parents too busy or ill-equipped to teach their kids, the ABA Education Foundation offers these quick tips to help make every day “Savings Day”:

-- Help kids open their own bank savings account and make deposits regularly. Your child can earn their first deposit by doing neighborhood chores or selling old toys at a community garage sale.

-- Start a 401(Kids) program. Match 25 cents or 50 cents for every dollar that your child saves.

-- Break the money taboo. Talk to your kids about the family budget and include a discussion on wants versus needs. Reinforce this by budgeting for a family outing or purchase.

-- Take advantage of teachable moments. While children know that money doesn’t grow on trees, they may think it comes out of a wall. Show them how an ATM machine works and explain that to take money out of a bank, you must first put it in.

-- Give your kids positive feedback. As children get older, give them responsibility over how they spend their money.

Research shows that a lack of financial education can have serious long-term effects. According to the National Foundation for Credit Counseling, 66.7 percent of people obtaining pre-bankruptcy credit counseling cited poor money management as their reason for seeking bankruptcy protection. And a recent study from the Consumer Federation of America showed that only 40 percent of adult Americans have separate emergency savings funds.“Whether you’re dreaming about owning a home or facing the reality of a medical crisis, you cannot overestimate the importance of saving,” said ABA Education Foundation Director Laura Fisher.