We’ve all seen that Public Service Announcement from the Ad Council and The American Institute of CPA’s that urges us to “Feed the pig.” Well, I will be the first to say it is annoying, but it is also very effective.
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In an almost Pavlovian way I am now conditioned to feed a piggy bank we found at a garage sale. We began putting all the loose change into the piggy at the end of the day. We found that in two months, we had saved more than 250 dollars that could in turn be put into our savings. Of course it doesn’t take the place of contributing to my 401K or Roth IRA and investing, just an additional way to save.
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Sometimes the genius is in the simplicity of things. This same approach may work with your children. The goal is to start them young and they will “pay themselves” first for the rest of their lives. Here are 3 ways to get your kids to save:
1. Piggy-backing on a great idea
I am sure your tween or teen has a piggy bank from back in the day. Dust it off and put it to work. Whether your child earns allowance through chores or you give it too them regardless, have them deposit any pennies or nickels they have at the end of the day into the piggy bank. After three months, have them count it up and make a deposit in their savings account. You want them to have the experience of counting out the change, writing down the deposit amount, while giving them the desire to fill the pig back up. By the end of the year, they will be amazed at how much money they actually saved.
2. Business Model
When our children were in middle school they started their own business. One mowed lawns when we lived in Florida, while the other washed cars. We required them to research jobs that flourish in the sub-tropical climate and they came up with the ideas and wrote proposals to get us to invest start-up money in their companies. It was a success for several years until the housing market bust and folks started mowing their own lawns and washing their own cars.
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The good news is that the children were required to save at least half of their earnings to hold them over for rainy days that were certain to come. Now they are in college and face some of the same dilemmas. As they are both on scholarship, they do not work but rather received a small allowance from us and have some savings from summer jobs. Each week we go over their accounts and they find it was much easier for them to save when their biggest purchases were soda or a bag of chips. Our goal was to expose them to earning money and saving as much of as possible. Now it is up to them to forge ahead when it comes to savings.
3. Three’s a Charm
The third tip is one I love from the American Bankers Association. It’s called the “three jar” method. I think it speaks to the core values that most parents want to instill in their children. Work hard, save for your future and try to make the world better than you found it. The ABA urges parents to make sure their children know the difference between wants and needs. Also to value the importance of saving and budgeting and what happens if you don’t.
The group suggests setting up a chore chart and giving your children an allowance based on the completion of the tasks. Give your child three jars. Have them decorate and label the jars- one for spending, one for saving and one for helping others. Then on payday have them deposit the money into each jar. They can then open up a savings account with the money saved. I suggest you work with them in researching where they want their charitable contributions to go. It can open up a door for a life-time of community service for them. And that’s my two-cents worth.
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