LG Insurance Agency has always been dedicated to providing you with the coverage you need at a significantly lower cost compared to the bigger insurance agencies. While you undoubtedly make plans to either set aside that saved money or allocate it to necessities for your family and home, how much thought have you put into what your kids learn from your saving, spending and investing habits? With the holiday season upon us, it is an especially good time to sit down with your kids and discuss what they plan to do with the money they may end up receiving for gifts. Below are a few tips we recommend for demonstrating to your kids the importance of saving money:
- Discuss Wants Vs. Needs. This is a lesson we adults often need a refresher on as much as our kids, so remember to be patient with them. Sometimes wants vs. needs is not always a clear cut distinction. While most kids are able to grasp that things like food, shelter and clothing are necessities while things like games, movies and gadgets are things we want rather than need, sometimes the line is blurry. Help your child understand that, for example, the $160 sneakers he’s had his eye on, though shoes fall into the category of clothing, are a want rather than a need since he already has a pair of sneakers.
- Give Your Child a Small Allowance. Rewarding your kids for chores around the house or doing well on a test will give them an incentive to save their money rather than spend it all at once, knowing they can grow their “savings account” to buy items they really want.
- Reward Savings Milestones. To further assist your kids to see the value of saving instead of spending, it’s a good idea to reward their efforts. For example, if your child makes an allowance of $10 a week and manages to not spend any of it for two weeks, match him with another $20.
- Give Them a Tactile Way to Grow Their Savings. The same way studies have shown that people tend to spend more when paying with a credit card instead of cash, kids are more likely to understand the value of their money and save it if they have a piggy bank, a special box, or some other specific place to save their cash rather than seeing numbers on a bank statement increase or decrease.
- Go Over the Math. Explain how, for instance, if your child is gifted $100 for the holidays, while also saving the $10 allowance he makes every week, with the $10 you’ll match if he saves it all, it will take him 3 weeks to save up for the sneakers. Also, discuss his other options so he won’t be as frustrated about having to wait. He may be able to buy two video games or a new pair of headphones with the same amount of money. Show your kids how saving their money and thoroughly thinking about purchases beforehand will give them more options.
- Leave Room for Mistakes. No one is perfect. As adults we often spend more than we mean to, so we can’t expect kids to never slip up. Empathize with them. Teach them that it’s okay that they spent the money they planned on saving, and that you’ve done it yourself. Encourage them and say you’ll get back on track together.
- Share Your Goals. To show your kids how fostering good savings habits now will help them in the future, it may be a good idea to show them your savings plan on something they’ll understand, like a vacation fund. Your kids will see how you have to save up for the things you want the same way they do.
- Set a Good Example. Your kids learn more from what you do than what you say. If you are out shopping together and they see you decide to not buy an item because it is something you want rather than need, they are more likely to take to heart everything you’ve been teaching them about the importance of saving money.
The team at LG Insurance hopes you find these tips useful and that you have a wonderful holiday season filled with joy, laughter and quality time with your family.