Get the kids involved

Even before they can spell their own name, children have developed emotional reactions toward saving money.

A study from the University of Michigan found that children not only develop feelings about saving money as early as 5 years old, but those feelings directly impact their developing spending habits.

During these informative years, it’s important to discuss finances as early as possible with your children. Most importantly, you should teach and model saving during those formative years.

Jen McCoy, an Everence Financial Planner based in Lancaster, Pennsylvania, often involved her four children as the family saved up for both small and big purchases, such as an ice cream outing or a family trip.

By making it a fun family activity, you can get your kids excited about the prospect of saving.

When her kids were young, Jen would have them “contribute” to family ice cream outings. Every time they completed an extra chore, Jen would add a marble to a small jar. Once the jar was full of marbles, the family could go out for ice cream. You could do the same and change the family activity to a trip to the movies or an excursion to the community pool.

This practice taught Jen’s kids to work hard for what they wanted, to be patient and to contribute together as a team.

For larger expenses – such as a family vacation – your kids won’t be “financially contributing” like they might for those smaller family outings. But that doesn’t mean you can’t include them in the saving process.

Jen suggests drafting up a savings chart and putting it somewhere your kids can see it, like on the fridge. When her kids were young, she used a drawing of a thermometer to mark the family’s progress and had her kids help color it in as she and her husband saved for a family trip.

“Young kids can’t understand a checking or savings account,” Jen said. “But they can understand through a visual – such as a filled-in thermometer or chart – that mom and dad saved another $100 toward the goal.”

In addition to keeping your kids in the loop about your family’s progress toward your goal, you can also use the visual chart to explain why certain purchases, like a new toy, might need to wait. You can explain to them that if you buy them the toy, it might delay the family’s saving goal of going to the beach or amusement park.

Even if your children are older, you can still incorporate these practices into your family’s financial life to help make saving fun and engaging, and teach your children the importance of saving for things you want.