Raising Savers
Posted by Gail | Filed under Kids & Money, Money & Family
As parents, we often sabotage the lessons we’re trying to teach about money. We tell kids to save their money, but we don’t save. We tell our kids to be smart shoppers, then we go out and blow money we never meant to spend. We don’t walk the talk, and kids know it.
If you want kids to be good about managing their money, you not only have to give them some (an allowance) and set some expectations (save), you have to demonstrate positive money management behaviours they can emulate.
Stop shopping as entertainment. It may be tempting to bundle the kids up and head to the mall where you can walk and talk and eat and shop and stay warm or cool, depending on the season, while ensuring a good night’s sleep because you’ve worn out your kidlets. Don’t. When heading to the mall is considered a family outing, the message you send your kids is that shopping is a form of entertainment. Head to the gym, the park, or an indoor playground instead. Pack your own snacks and it’ll cost less than a day at the mall.
Tell your kids to ask you why you’re buying something. Encourage them by offering up to 25¢ per shopping trip for asking you a question about shopping. What you want to do is open the conversation and start educating them on your thinking as you shop. And you want them to get into the habit of asking you about things they don’t understand.
Always compare prices. You can turn this into a math game with your kids. When you’re comparing prices, you’re looking for ways to save so you have to add and subtract. Have kids keep track of how much you’ve saved and add it to your “savings” jar at home, perhaps for your vacation fund or for a special weekend of treats for the kids.
Don’t buy lottery tickets. If you’re a saver and have a plan for the future, you don’t need the lottery. When you buy lottery tickets you’re telling your kids you’re hoping for a windfall; you’re not in charge of building your own long-term savings. It’s the wrong message to send.
Set some savings goals. What better time to create a pay-yourself-first automatic savings plan than right at the beginning of the new year. Want to save $1,200 in your RRSP this year? Have $100 a month auto-deducted from your regular account and sent over to your RRSP. Plan to accumulate two month’s worth of essential expenses in the next six months? Don’t wait to see how much is left, send some money to your high-interest savings account from each paycheque so you’re actually working towards your goal. Planning a family vacation? Create a chart you and the kids can colour in together to show how much you’ve set aside and how much closer you’re getting to your goal.
Ultimately kids will learn far more from what you do than from what you say. If you want to deliver a consistent message and be the role model that sets them on the right course, this is the year you clean up your act!
January 2, 2013 at 7:19 am
Great tips to start the new year, Gail. I am so proud of my 20 year old son for many reasons, but especially for his mature approach to money, and it’s all because I talked so openly to him for years about budgeting, and we are both big fans of Til Debt Do Us Part. Now he is a new parent of a baby girl and I know that he and his girlfriend are going to use your tips raising my little granddaughter which will help this young family stay on track.
January 2, 2013 at 7:48 am
The kids are learning how to type on a computer so soon I’ll hand them a receipt and tell them to type the #s in the budget spreadsheet. That way they’ll get used to seeing it and learning how it works over time.
January 2, 2013 at 8:49 am
I’m not so sure Gail….we set example and walked the walk but our daughter turned her back on every lesson we tried to teach her. Still trying over here but I really think it’s too late for her.
January 2, 2013 at 9:09 am
Good advice. I especially like “Stop shopping as entertainment.” A trip to the mall is a poor excuse for a family activity and leads to spending money on wants, not needs.
OT: Don’t forget to transfer your $5,000 for 2013 into your TFSA so you can earn money all year.
January 2, 2013 at 10:04 am
And is the new TFSA ceiling $5500? Anyone?
January 2, 2013 at 10:08 am
Great ideas! I love the idea of getting them to ask questions and to chart savings in a way they can appreciate. Although my parents led by example, being quite disciplined and smart with their money, my dad thought it was very personal to talk about money, so we never knew much about the family finances at all. I would like to be more transparent with my kids so they can benefit from the experience earlier on.
January 2, 2013 at 10:45 am
When you don’t take your kids to the mall, they quickly become savers. Mine seldom have the opportunity to spend their money, so they don’t. My eldest is now working, and works in a lovely store with many accessories and bling, but she doesn’t spend, except for gifts for others. At 16, she has over $3000 saved. She knows that she will need to supplement her education costs, so she puts most of her cheques into a savings account.
The youngest may not have the same attitude; we’ll see… They are polar opposites, despite having grown up under the same rules and teachings… I believe she’ll turn out okay financially, but I expect she’ll take a more challenging route.
January 2, 2013 at 10:47 am
@M yes the amount you can put in your TFSA is now 5500, you can go to your account on the CRA website and find out what your contribution room is.
I never thought I’d be one of those people who shop when their bored but between cold weather, a two month old and Christmas its been all to easy to say ‘lets go to the mall’. I am totally going to look for alternative places to go.
January 2, 2013 at 11:25 am
Great points Gail! I’m so thankful to have had amazing parents who taught me all the right things from such a young age. I’ll be sure to share these tips with anyone that can use them. Thanks!
January 2, 2013 at 11:46 am
I love the idea of getting the kids to ask about why you’re buying what you’re buying. Then it externalizes your arguments.
January 2, 2013 at 12:01 pm
@ Delores – sometimes the apple falls far from the tree. And other times, children just need to sort of repeat the same mistakes their parents made before it sinks in (I speak here as the child, not the parent, as my son is only 5) but I made some mistakes that I could have avoid had I listened to counsel.
January 2, 2013 at 1:13 pm
All good advice Gail. My son (oldest) is extremely careful with his money but not my daughter. But he had important lessons very early on …he broke a jar of something from the grocery bag (after being told to leave that bag alone) so I took him back to the store to replace it from his piggy bank. Also when he lost an almost new pair of shoes he had to replace them as well from his money. Sounds hard-hearted but ….
January 2, 2013 at 5:12 pm
I agree whole-heartedly! living in Winter-peg with three youngsters close in age and one income meant we needed indoor fun during the winter. we bought a pass to the Manitoba Museum for many years and every weekend our kids got to know that place inside out. Even if they raced through it with my husband or I, they got to know the displays and some of the history behind our province and for a special treat we’d go to the Planetarium or sometimes one of us parents would stay home and have some quiet time without the kids as a treat. Be creative, a pass to a swimming pool or Y membership will also pay for itself during the year if you have kids… None of us really goes to the mall that often, we don’t view it as Entertainment I guess. Happy New Year Gail and all the readers.
January 2, 2013 at 6:11 pm
Great ideas Gail! I need to implement a lot of these! Thanks and Happy New Year!
January 2, 2013 at 7:09 pm
@Delores, your daughter will “remember” the lessons you taught her one of these days. Sometimes we need to tell our kids to be careful or they will hurt themselves. Sometimes they need to skin a knee or two to really learn the lesson. Eventually, they figure it out as long as they have the information to learn from. Sounds like you have her the information.
I think the biggest lesson I learned from Gail was to be open about money with the kids. They don’t need to know all the details right away, but age appropriate learning about our financial situation was an eye opener for them.
Since my girls were 4+5 I have always let them know that we are shopping for Needs not Wants when we hit the grocery store, and they have always known that we don’t shop wastefully. Letting my daughter at 17 know how much I make, how much the mortgage is, how much the debt is costing us, how much the interest is on the CC etc is and making her aware of the cost of our lives really was an eye opener to her. (“Hydro costs how much??”)
It was also good for us to get the numbers off our chests and out on the table. No more pretending things are ok if they are not.
Now, at 18 and halfway through her first year of University she has worked out a budget, cooks her own meals, buys groceries on Cheap Student day at the shops, and is re-using and re-cycling her clothes, notebooks, pens etc. She was given a Lump of money (RESP) and has to budget her way through the year. So far so good.
I guess our walking the walk and talking the talk (even with the stumbling and mumbling we’ve done over the years) has sunk in.
January 2, 2013 at 7:30 pm
Being honest with your kids, as age appropriate so they feel secure, seems to be pretty important. I think they can even learn from your mistakes and challenges if they see what’s going on and the consequences. Great column!
January 2, 2013 at 8:01 pm
My 8 year old daughter loves your show and always wants to watch the Princess show. She has decided to be debt free when she gets older and is already starting to save her money.
January 4, 2013 at 6:08 am
[...] Gail Vaz-Oxlade shared some wonderful advice for parents about Raising Savers. [...]
January 4, 2013 at 2:17 pm
Thank you for writing another excellent column, I will be sure to share this with my friends and family who already have children. When I was brought up my parents never allowed for extras, saving was mandatory and trips to the mall were rare. . . my finances at 30 are now far better than most of my peers and I was blessed to have that positive start in life.
(ps I’m a big fan of your articles and shows, keep up the great work!)
January 17, 2013 at 6:49 pm
I’d like to say thanks to Linda, because right after reading your comment I transferred my money into my TFSA. I always do it at the beginning of the year because, like you said, may as well be earning the interest all year!
February 20, 2013 at 12:23 pm
[...] Raising Savers [...]