In times when ‘recession’ is the word of the day and job losses mount to all-time highs, everyone feels the need to pass on the word of financial education to anyone willing to listen, this includes small children. Perhaps the thought behind the messages is that the young learn best early, and if they can form a habit of saving in their youth, then it is likely to continue into their years as an adult. After all, this perspective of saving what you earn seems to have been lost on some of the preceding generations, and there is little doubt as to why.
After many laws set precedents on legal working ages, and the economy reflected good conditions for working parents, children lost the entrepreneurial drive early. Rather than working hard at the self-made lemonade stands or mowing lawns in the neighborhood, increasing numbers of children received weekly or monthly allowances. While not a bad thing, some allowances only required simple good behavior and grades, which is what one would expect of their children normally, instead of paying them for a job well done in only one respect. As for what happened to said allowance? They’d spend it.
Of course the money would be spent, and quickly. After all, these children didn’t do anything more than what they could handle, and weren’t going the distance or particularly out of their way. It was the first onset of laziness that industry is seeing in their younger workers today. But why is it this way? Is it because of the many items and candies that are specifically targeted at the younger ages? It might be, but also there isn’t any desire to save that which is given to you, especially when one is given the mindset that it is given with the intention of being spent.
Well times have changed slightly, and it is good for the new generations to see everything as an expense and not a treat. However, it is better to impress upon children that things that are worked for do get rewarded, but on varying degrees based on their efforts. An obvious high school application would be in terms of the honor roll or high honor roll, but what of the small children, perhaps even those before school? How are these children rewarded for excellence and taught the value of the currency? It is a difficult question.
One way is through casual sayings that place the thought into a child’s subconscious, as a form of subliminal messaging. “A saved penny a day, helps keep misfortune away,” and similar phrases would be fun to repeat, but might imprint something more later on. The classic Piggy Bank is an excellent teacher, especially the child is convinced that in order to fatten the piggy, it is necessary to feed it daily if possible (in set increments) so that the child will feel inclined to save their change. The aspect of feeding the piggy also helps pave the way for pets later on, and gives an introductory to responsibility. After the piggy bank is full, a new one can replace it, or if it can be opened the parent can replace the accumulated saving with the equivalent in dollars.
Other ways of increasing saving habits and awareness is through the use of games or charts. Incremental games are fun, an example being an annual penny saving plan. In this plan one starts with the first of the year and a set payment scheme, such as a penny for the first day, two for the second, and matching the days to the number of pennies throughout the course of a year.
On the 365th day the child would hope to have $3.65 to put away, although the increment might be a little steep for a small child, as the total saved for the year would come to $667.95. Even if it increased by one penny each week (7 total cents the first week, 14 cents the next, 21 cents for the third) there would be $96.46 saved for the year. However, to practically meet the deadline for each day’s deposit, the child would learn to hold onto more money in the present to meet the demand in the future. This practice is invaluable because it’s just like meeting bill payments as an adult, with additional saved money to ensure later payments can be made on time.
With the right level of creative application, there are many other good and practical possibilities for teaching good habits to small children, as well as helping the adult instructing them with saving strategies of their own.