Kids and Money

Saving--the ability to set aside some money routinely from a stream of income--is at the heart of household asset development. It is the springboard to investing in property or stocks. Though one may believe that people in poor households absolutely cannot save, research has refuted this notion repeatedly.

So how do we learn how to save? I learn alot about how kids see money from talking with families in our 4-H program. There seems to be two different paths parents set their children on one allows kids to spend what they have on their wants, the other encourages kids to think about what they really want and plan their purchases.

The life-long benefits of teaching your children good money habits makes it well worth the effort. Parents can begin to teach the money concepts of earning, spending and saving when children can talk in sentences. Spending refers to how kids decide to use money.

A couple of spending concepts to teach include:

The difference between wants and needs. Help them find a balance between these two spending motivations . Let your child know you know you can't afford to buy everything you want, either. This could be brought out while window-shopping together.

Explain the bigger financial picture. For example, a movie involves not just the price of admission, but gas for the car, popcorn, pop, time and energy.

I'm noticing it's this latter concept, the bigger financial picture that has many young people planning movie nights at each other's houses ----renting a movie, popping some popcorn and sharing a liter of soda is a way to enjoy a Friday evening and still save some of their allowances.

And in my own life, as I work to practice what I preach, I'm learning to filter my purchases through my needs or wants conversation with myself, and trying very diligently to spend less on the wants category. Several years ago I taught a class "Saving Dollars When You Don't Have a Dime to Spare" which helped me better understand my impulsive purchases. i.e. magazines at the grocercy check out; eating lunch out everyday rather than brown bagging, buying from the vending machines. I think there's many teachable moments available to us as we have conversations with young people about needs and wants----theirs and ours.