The Third Pillar: Save Regularly

"With money, it's not what you make it's what you keep" Paul Brown

Want to teach kids how to save? Then talk about what they want to buy! OK sounds like a pretty obvious disconnect, not so, as soon as you get them describing their wants, the conversation about SAVING has begun. 

Brainstorming with them about HOW they will get that item, what it costs and how long it will take to save for it, engages them in the planning. 

Children learn by doing. Having some money to make a plan with, allows them to develop the saving regularly habit. 

They gain confidence by practicing and acquiring skills. 

Teaching them successful saving strategies helps them learn the fundamentals of sound money management. Saving regularly is one of these. It teaches them: 

• It’s OK to want things and a financially healthy way to get them 
• How to make and use a money plan, aka “budget” 
• How to prioritize short and long term goals 
• Delayed gratification 
• The "language of money" eg: interest, compounding
• To always have money set aside 

How to get them started 

Help them make a plan to save some of their money for that item they told you they really want. Remember the two savings accounts we talked about last time? It’s now time to really activate the second account. Why? It holds the money for their mid and longer term goals. 

Show them they already know how to save! Point out to them they are already saving because they have the PAY MYSELF FIRST Account (PMFA). This account holds the money for their long, long term goals. 

Chances are if they are encouraged to save some of their money on a regular basis they‘ll continue to do so.  Now they are on the road to becoming successful savers! 

“If you would be wealthy, think of saving as well as getting.” Benjamin Franklin 

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The Second Pillar: Spend Wisely

"Our necessities never equal our wants." Benjamin Franklin 

It's all about choice! Our children are bombarded daily with consumer products that seduce them into wanting all kinds of things. That goes for all of us, we know how hard it is to resist the temptations. After all, separating us from our money is what marketing is about. 

Teaching our children the difference between needs and wants and making choices about how to spend money, helps them develop an essential life skill and build self-confidence. 

Knowing how to make wise choices empowers our children. It teaches them how to:

• Live within their means 
• Avoid bad debt
• Make a Money Plan
• Think before they act

How to get them started

Have a conversation:  For young ones, encourage them to make a wish list and talk about what their top two choices would be for spending their money. Introduce the difference between needs and wants and listen to what they see are the differences, when it comes to their wish list. This can be very revealing! 

For teens, encourage them to spend only what they have. How? Don’t advance money until they demonstrate a firm grasp of the difference between needs and wants. 

For the young adults, talk to them about their spending. How it is working for them? What they they change and how?  

Share some of your life experience:  Tell them about some of the choices you've made. What you’ve learned are the differences between needs and wants. 

Remind them learning to spend wisely happens over time and experience is a powerful teacher.

"Life is the sum of all your choices." Albert Camus

Want to learn more?  Visit www.fourquartersfinance.com