Saving and Giving: Teaching Kids to Plan

By JoAnn Turnquist
President and CEO, Central Carolina Community Foundation
January 10, 2014

Saving. As adults we know it’s critical, but learning to save is often tough. The savings rate in our country illustrates the difficulty. The National Institute on Retirement Security says the typical American family has only ‘a few thousand dollars’ saved for retirement.
 
In fact, for people 10 years away from retirement, the median savings is $12,000 and, one third of the folks between the ages of 55 and 65 haven’t saved anything. So, how can we actively help our children learn about the necessity and benefits of saving at early age? How can we incorporate saving as one of the ‘big three’ — saving, spending, sharing — buckets?
 
Well, it’s a New Year! A perfect time to take three easy steps that will help your children build healthy saving and sharing habits.
 
Step One: Take a trip to the bank or credit union
 
Take your daughter to your bank or credit union to open or add to a savings account. Discuss her monthly statement so she can become comfortable with it and, through the year, point out the gradual effect of time and interest on her balance.  Use an example to illustrate the future balance she may have if she continues to save. It’s always exciting to see money grow.
 
Step Two: Set goals  
 
Teach your son the expression pay yourself first, which means setting aside a percent of money for savings before he spends it on anything else.  How much should he save?  Financial advisors recommend saving 10 to 15 percent of income. Money can be saved from a weekly allowance or cash gifts and put in a saving jar or piggy bank.  Then, plan regular trips to the bank or credit union to deposit those savings.
 
Once he’s decided how much he wants to save, talk to your son about sharing.  How much money would he like to give away?   Help him determine what he cares about and where he would like his charitable dollars to go. Make giving real by taking him to deliver the donation.
 
Step Three: Keep talking
 
Parents should consider their financial decisions — large or small — as opportunities to demonstrate smart money management to their children. Sharing information specific to saving, spending, investing and giving and, discussing how financial decisions are made and how income is spent, will help children adopt financial habits that will benefit them and those they care about today and in the future.

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