Training your kids to “feed the pig”: Teaching money saving skills from day one

Money. It may not be able to buy happiness, but it sure does make your world go ‘round. And it seems, more often than not, that no matter how much of it you bring home, there’s never quite enough.

That’s supposed to be one of the beauties of being a child. It’s a time when bills and other financial responsibilities are a distant thought, if even a thought at all. However, the truth is a little less idealistic, because let’s face it, kids become aware of money and what it can do at a very early age.

The other day, my preschooler saw someone on TV step out onto a balcony. “We need to buy one of those for our house,” she told me. And I realized, like so many parents, that I have a long, hard job ahead of teaching my kids to save and manage money. How to begin?

Well, I started by asking an expert in the money saving business. And I found the perfect financial-education whiz in Jill Castilla, Executive Vice President and Chief Credit Officer of Citizens Bank of Edmond. Here are some tips she gave me that can give any parent a head start on teaching their kids about money, spending, and saving for what they really want.

Money talks. No, I don’t mean you tell your kids to start bribing restaurant hostesses, etc. What I mean is that you need to have some talks about money. Castilla suggests you discuss your own spending habits with your children and explain why you did or didn’t purchase something. If your children are older, educate them about credit cards and how mistakes can have a long-term negative effect. Show them what credit reports look like and what they mean (these days, a credit score can impact everything from getting a job to even purchasing a cell phone). Use whatever personal experiences you can to bring the message home.

Discuss your own spending habits with your children and explain why you did or didn’t purchase something.

Sweeten the pot for your own children by matching the money they put into their savings account.

Open a bank account early (and maybe play a little 401(k) with them). Castilla encourages parents to open bank accounts for their children as soon as possible. That way, when kids receive birthday or other special occasion money, parents can discuss the benefits of putting the money in an account and saving for something bigger versus blowing the money on a toy that a child may not really want (an impulse buy—who does that?). Castilla sweetens the pot for her own children by matching the money they put into their savings account, a strategy that will have kids thinking about investments long before they land that first job!

Lead by example. And last but not least, Castilla emphasized the importance of teaching by example. Whether you’ve always practiced good money management or you need to turn over that proverbial new leaf, it’s never too late to watch your spending and start saving. Thinking through big purchases, resisting the urge to always buy on credit, and setting financial goals is as important for you as it is for your child, and you will establish a pattern of smart-money behavior that your children can model for years to come.

Setting financial goals is as important for you as it is for your child.

For more money education resources, check out the Parent Money Manual from the American Bankers Association or Feed the Pig.