Consider the following example as it relates to this week’s topic. It’s a true story but the child’s name has been changed to protect his privacy.
I’m so proud of my young son. A little over a year ago, Alexander and I had a discussion about the importance of earning and saving money. We set a financial goal for him to achieve, and I committed to match his earnings/savings and assist him with opening a bank account once that goal was reached. He worked hard by completing chores and saving money that he’d received for special occasions (birthdays, the tooth fairy, etc.). Today was his big day, and the employees at our bank were awesome in making this a special day for him. He was so excited!
Over the past year, I’ve had many conversations with tweens and teens about money, and in particular, saving money. While some already have quite a stash of their own saved up, others looked at me, currently through Zoom, of course, like I’d lost my mind! Why on earth would I suggest they consider putting some of their hard-earned wages or birthday money aside? They can just ask their parents for things, right?
And why is a psychologist talking with you about saving money in the first place? Learning how to wait for things we want, also known as “delaying gratification,” and how to work toward goals, which we fondly refer to as “goal-directed persistence,” are two important developmental milestones. And we’re here to help you help your kids along the path.
It’s hard to imagine there could be any drawbacks to keeping all of that cash at your fingertips, in your phone case, or loaded onto your debit card. How do you teach kids about money? What if you already have teenagers and haven’t begun? Is it too late? I say that it’s never too late to start building new, positive, and, hopefully, lifelong habits! And sometimes, one new habit can carry over to others!
What You Can Discuss with Your Kids
Here are some ways to “sell” the idea of savings to your kids:
- Like in the example from my friend above, help your kids set a goal and incentivize them by offering to match what they earn and save. Pick something specific, special, or long sought after so the pot of gold at the end of their hard journey stays attractive over the time it’ll take them to save.
- Tell them stories about times when you or others you know wanted to do things and were either able or unable to based on whether there was money saved up or not.
- Make up a scenario to help them see how saving money can be beneficial. You can use the following:
- “Imagine you’ve been working, babysitting, or walking the neighbor’s dog for a while and have been spending all of your money each week. Then a cool concert pops up and you really want to go but know your parents won’t pay for it. You think you can ask them to lend you money, but they say that this is one of those things you have to pay for yourself. You realize that if you’d just saved some of what you’d earned, you’d have had enough money for the concert along with snacks and a t-shirt.”
- Help your kids understand that there’s value in putting some of their precious money in a not-so-accessible place. That way, they’ll be much less temped to use it. This is why piggy banks that make it easy to put money in but a big deal to get it out work decently well.
- There’s a principle that Mike Michalowicz writes about in his life-changing book, Profit First, called Parkinson’s Law, which is the human tendency to unconsciously allow work to expand to fill whatever time is available to complete it. So, if you have two weeks to do an assignment, most of it will take two weeks or longer to complete. But if you’re only given three days, you’ll complete it in three days. Think about how you managed in a dorm room or small apartment when you were younger but have had no problem expanding to fill whatever closets you have now. The same goes for money. Take your savings off the top and you’re apt to save. Wait until you’ve paid all of your bills and spent all you want (or think you need) and there will likely be little, or nothing, left for profit or to save. So, Parkinson’s Law applied to your kids (and to you and me) is to decide how much time they WANT or think they NEED to complete a task and not necessarily let the due date dictate how they work or for how long. With regard to money, help them decide how much money they WANT to save or have leftover at the end of a specific length of time instead of leaving it to chance and hoping they end up with some left over.
- Help them figure out how much money they want to keep for now and how much they’ll want to save for later. You might decide to use a percentage or dollar amount. For example, if they typically earn about $25 to $50 per week, perhaps they can opt to do a 50/50 split regardless of their actual earnings. Or maybe they’ll want $20 each week and decide to keep $20. They can save the rest regardless of what they earn.
- And just to muddy the waters a touch more, some parents opt to have their children divide their earned or gifted money three ways: some to spend, some to save, and some, even a pretty small amount, to donate to a non-profit for a cause they care about. Then have your kids deliver the donation in-person to connect the abstract nature of saving with the happy-on-the-inside feeling of giving to others in need and being a part of something much larger than themselves.
Offering Sound Advice in Tampa
I’d love to know what has and hasn’t worked for your family when it comes to saving money. Feel free to email me here or leave us a message on our Facebook page. At Rice Psychology Group, we understand that talking to your child about money or other tough subjects isn’t a one-size-fits-all approach. That’s why we’re here to listen to your concerns and help you develop a plan that works for you. Feel free to contact our licensed psychologists and therapists in Tampa to schedule your online session today.
And don’t forget about our next Parent Clubhouse meeting on October 1st at 7:00 PM via Zoom. For more details on this complimentary service or for meeting login info, click here.