Is it predetermined that you will be a good saver or is this learned behavior? It dawned on me the other day that so many people have different ideas about how to spend and save money and I’m not really sure when this begins. How early is too early to learn about spending and saving money? There are at least a few things parents can do to start teaching their children about spending and saving at an early age.

Allowance is a Good Thing: I started receiving an allowance at a very early age. I was convinced my parents did this because they were tired of telling me that Barbie dolls don’t grow on trees, but of course now I realize they had other motivations. By giving your children an allowance, you are laying the foundation to start teaching them how to make their own financial decisions.

Say No: OK, go ahead and laugh, but this is hard for some parents, especially when you’re children are asking you to buy something for the millionth time. Sometimes it’s just easier to give in, but don’t do it. Saying no is a great way to start talking to your kids about earning, saving, and spending money. If you start the conversation with “money doesn’t grow on trees” you’ve already lost them. Relate the conversation to your kids. Talk about something they want and how they might be able to earn or save money in order to buy it themselves.

Offer Some Guidance: Whether you want to or not, this one is inevitable. My brother, sister, and I all had three different financial personalities. My brother would save every dollar he was given and never spend a dime. I would find something to save for, buy it, and then start saving again for the next thing. My sister, however, would spend her allowance the moment she got it. It never failed. Each month she would come back from the candy store or the dollar store with a bag full of junk she bought for $5.

You are not always going to agree with your kids’ financial decisions, but sometimes they need a little guidance from you, the parent, to become better at making decisions about money. Once my parents stepped in, and after several months of my sister not being able to touch her allowance, she finally got the picture when she realized how much money she had saved at the end of her hiatus from spending. Be patient. For some kids, it takes a little longer to get the idea, but it will come.

Reward Good Saving Behavior: One of the ways my parents rewarded good saving behavior was by matching our savings. I distinctly remember saving all my birthday and allowance money for several months in order to purchase a brand new bike. If I think about it, my allowance was only $5 per month at the time, so it would have taken me years to buy that bike myself, but my parents came up with this great idea of matching my savings. They were aware it would take me a long time to even come up with half of the amount, so they figured if I could do that then they could come up with the other half for the bike. You certainly wouldn’t have to do this for all of your kids’ purchases, but this is a great way to reward good saving behavior and it allows kids to become better at saving for bigger items.

Be a Model Saver: One of the top ways you can teach children to save money is by saving money yourself. If you’re just buying whatever you want every time you go to the store, you aren’t teaching your children how to save money or make responsible spending decisions. If you’re saving for a new TV or a family vacation, include your children in on these discussions. Let them see how much money you’re saving each month, and demonstrate ways to spend money responsibly in order to save for that TV or vacation.

Like any project with young children, these steps will take time and patience, but in the end, it could result in financially responsible young adults. What more could you ask for as a parent?

Image courtesy of svenwerk