Summary
- Treat saving as “working toward,” not “doing without.”
- Give your children fewer gifts and more goals.
- Try spending less time at the mall.
Overspending can become a family habit when the economy is strong. But living beyond your means puts you at risk of going into debt. Fortunately, it’s never too late to learn how to live with less.
For many, learning to save will make the difference between economic survival and disaster, such as bankruptcy or the loss of a home. For others, the dangers may be less stark but the need to teach frugality is just as clear. Old habits have to change, and that goes for both parents and children.
The real challenge is not just to rein in spending during a crisis, such as an economic downturn or job loss, but to foster new habits of saving that will remain when the good times return.
The family that saves together
If older children and teens are not already learning to budget and save, it’s time to teach them how.
They are also old enough to play a part in the setting of family saving goals. They can sit down with their parents and decide what steps everyone can take to cut back consumption and build up a rainy-day reserve.
“This allows them to restructure their thinking, discourage impulse buying, and change their behavior in ways that are more constructive,” says Deborah C. Bailey, a family counselor and assistant professor at Central Michigan University. This way, she adds, “they are not ‘going without.’ Rather, they are ‘working towards.’”
In other words, a family that saves together toward shared goals accentuates the positive: Saving doesn’t just take away; over time, it gives back. It’s something to be happy about.
Make saving pay
This upbeat attitude toward saving can and should be taught at an early age, say the experts. Brent Kessel, co-founder of the investment advisory firm Abacus Wealth Partners, says he encourages his children to salt away their allowance by paying them an “artificially high” rate of interest—100 percent a month until their savings reach $50, with a lower rate above that. “The idea is to give kids a very real reward for deferring their gratification,” he says.
Michael Osit, a New Jersey-based clinical psychologist, follows a similar strategy. He made an arrangement with his children, when they were very young, that he would match the money they put in the bank, dollar for dollar.
Kessel also gets his children to save from a very early age—starting at 3 years—by giving them three jars to put their allowance in. The first is for saving, the second for spending, and the third for giving. He encourages them to put the same amount in each.
No more recreational shopping?
Shifting from overconsuming to saving requires a change in lifestyles as well as attitudes. What parents and children do for fun may have to change, especially if it obviously costs more than a cheaper alternative (restaurant meals vs. eating at home, for instance). But they also may need to cut back on some activities that seem more or less free. Bailey cites two:
- TV-watching by kids
- Recreational trips to the shopping mall
Both are temptations to consume, she says. On children’s television, the push comes from advertising. Hanging out at the mall puts children and adults in an environment with a constant “buy something now” message.
Remember, it’s still your money
Parents have several roles to play in the family saving game:
- Teacher, since adults are supposed to be at least a bit wiser about money than their children
- Savings coach, who motivates the family as a team to set goals and save toward them
- Models—a role that may be as hard for them as it would be for their children. “If parents choose to adopt a simpler lifestyle, their children will pick that up,” says Bailey.
There’s yet another role for parents—that of paymaster. In nearly all families, parents control most of the money that’s available to their children, even into the college years. If teaching, financial incentives, coaching, and pleading don’t work, the power of the purse strings is still there to be used.
And Osit, for one, sees it being used more these days. Kids are “used to getting ‘yeses’ from their parents. Now what I see happening, even with well-off families, is that kids are getting ‘nos’ instead.” Kessel says taking away credit cards or taking other steps to rein in spending can be unpleasant medicine, but it may be what’s needed to teach habits of thrift that a teenager needs to become a self-reliant adult: “As distasteful as it is, unless you want your kid living on your dole at 28, it’s better to take it now.”
Resources
American Institute of Certified Public Accountants’ “Feed the Pig” website;
www.feedthepig.org
Financial Web’s “Saving Money as a Family Unit”:
www.finweb.com/financial-planning/saving-money-as-a-family-unit.html
Generation Text: Raising Well-Adjusted Kids in the Age of Instant Everything by Michael Osit. AMACOM Books, 2008.
Summary
- Treat saving as “working toward,” not “doing without.”
- Give your children fewer gifts and more goals.
- Try spending less time at the mall.
Overspending can become a family habit when the economy is strong. But living beyond your means puts you at risk of going into debt. Fortunately, it’s never too late to learn how to live with less.
For many, learning to save will make the difference between economic survival and disaster, such as bankruptcy or the loss of a home. For others, the dangers may be less stark but the need to teach frugality is just as clear. Old habits have to change, and that goes for both parents and children.
The real challenge is not just to rein in spending during a crisis, such as an economic downturn or job loss, but to foster new habits of saving that will remain when the good times return.
The family that saves together
If older children and teens are not already learning to budget and save, it’s time to teach them how.
They are also old enough to play a part in the setting of family saving goals. They can sit down with their parents and decide what steps everyone can take to cut back consumption and build up a rainy-day reserve.
“This allows them to restructure their thinking, discourage impulse buying, and change their behavior in ways that are more constructive,” says Deborah C. Bailey, a family counselor and assistant professor at Central Michigan University. This way, she adds, “they are not ‘going without.’ Rather, they are ‘working towards.’”
In other words, a family that saves together toward shared goals accentuates the positive: Saving doesn’t just take away; over time, it gives back. It’s something to be happy about.
Make saving pay
This upbeat attitude toward saving can and should be taught at an early age, say the experts. Brent Kessel, co-founder of the investment advisory firm Abacus Wealth Partners, says he encourages his children to salt away their allowance by paying them an “artificially high” rate of interest—100 percent a month until their savings reach $50, with a lower rate above that. “The idea is to give kids a very real reward for deferring their gratification,” he says.
Michael Osit, a New Jersey-based clinical psychologist, follows a similar strategy. He made an arrangement with his children, when they were very young, that he would match the money they put in the bank, dollar for dollar.
Kessel also gets his children to save from a very early age—starting at 3 years—by giving them three jars to put their allowance in. The first is for saving, the second for spending, and the third for giving. He encourages them to put the same amount in each.
No more recreational shopping?
Shifting from overconsuming to saving requires a change in lifestyles as well as attitudes. What parents and children do for fun may have to change, especially if it obviously costs more than a cheaper alternative (restaurant meals vs. eating at home, for instance). But they also may need to cut back on some activities that seem more or less free. Bailey cites two:
- TV-watching by kids
- Recreational trips to the shopping mall
Both are temptations to consume, she says. On children’s television, the push comes from advertising. Hanging out at the mall puts children and adults in an environment with a constant “buy something now” message.
Remember, it’s still your money
Parents have several roles to play in the family saving game:
- Teacher, since adults are supposed to be at least a bit wiser about money than their children
- Savings coach, who motivates the family as a team to set goals and save toward them
- Models—a role that may be as hard for them as it would be for their children. “If parents choose to adopt a simpler lifestyle, their children will pick that up,” says Bailey.
There’s yet another role for parents—that of paymaster. In nearly all families, parents control most of the money that’s available to their children, even into the college years. If teaching, financial incentives, coaching, and pleading don’t work, the power of the purse strings is still there to be used.
And Osit, for one, sees it being used more these days. Kids are “used to getting ‘yeses’ from their parents. Now what I see happening, even with well-off families, is that kids are getting ‘nos’ instead.” Kessel says taking away credit cards or taking other steps to rein in spending can be unpleasant medicine, but it may be what’s needed to teach habits of thrift that a teenager needs to become a self-reliant adult: “As distasteful as it is, unless you want your kid living on your dole at 28, it’s better to take it now.”
Resources
American Institute of Certified Public Accountants’ “Feed the Pig” website;
www.feedthepig.org
Financial Web’s “Saving Money as a Family Unit”:
www.finweb.com/financial-planning/saving-money-as-a-family-unit.html
Generation Text: Raising Well-Adjusted Kids in the Age of Instant Everything by Michael Osit. AMACOM Books, 2008.
Summary
- Treat saving as “working toward,” not “doing without.”
- Give your children fewer gifts and more goals.
- Try spending less time at the mall.
Overspending can become a family habit when the economy is strong. But living beyond your means puts you at risk of going into debt. Fortunately, it’s never too late to learn how to live with less.
For many, learning to save will make the difference between economic survival and disaster, such as bankruptcy or the loss of a home. For others, the dangers may be less stark but the need to teach frugality is just as clear. Old habits have to change, and that goes for both parents and children.
The real challenge is not just to rein in spending during a crisis, such as an economic downturn or job loss, but to foster new habits of saving that will remain when the good times return.
The family that saves together
If older children and teens are not already learning to budget and save, it’s time to teach them how.
They are also old enough to play a part in the setting of family saving goals. They can sit down with their parents and decide what steps everyone can take to cut back consumption and build up a rainy-day reserve.
“This allows them to restructure their thinking, discourage impulse buying, and change their behavior in ways that are more constructive,” says Deborah C. Bailey, a family counselor and assistant professor at Central Michigan University. This way, she adds, “they are not ‘going without.’ Rather, they are ‘working towards.’”
In other words, a family that saves together toward shared goals accentuates the positive: Saving doesn’t just take away; over time, it gives back. It’s something to be happy about.
Make saving pay
This upbeat attitude toward saving can and should be taught at an early age, say the experts. Brent Kessel, co-founder of the investment advisory firm Abacus Wealth Partners, says he encourages his children to salt away their allowance by paying them an “artificially high” rate of interest—100 percent a month until their savings reach $50, with a lower rate above that. “The idea is to give kids a very real reward for deferring their gratification,” he says.
Michael Osit, a New Jersey-based clinical psychologist, follows a similar strategy. He made an arrangement with his children, when they were very young, that he would match the money they put in the bank, dollar for dollar.
Kessel also gets his children to save from a very early age—starting at 3 years—by giving them three jars to put their allowance in. The first is for saving, the second for spending, and the third for giving. He encourages them to put the same amount in each.
No more recreational shopping?
Shifting from overconsuming to saving requires a change in lifestyles as well as attitudes. What parents and children do for fun may have to change, especially if it obviously costs more than a cheaper alternative (restaurant meals vs. eating at home, for instance). But they also may need to cut back on some activities that seem more or less free. Bailey cites two:
- TV-watching by kids
- Recreational trips to the shopping mall
Both are temptations to consume, she says. On children’s television, the push comes from advertising. Hanging out at the mall puts children and adults in an environment with a constant “buy something now” message.
Remember, it’s still your money
Parents have several roles to play in the family saving game:
- Teacher, since adults are supposed to be at least a bit wiser about money than their children
- Savings coach, who motivates the family as a team to set goals and save toward them
- Models—a role that may be as hard for them as it would be for their children. “If parents choose to adopt a simpler lifestyle, their children will pick that up,” says Bailey.
There’s yet another role for parents—that of paymaster. In nearly all families, parents control most of the money that’s available to their children, even into the college years. If teaching, financial incentives, coaching, and pleading don’t work, the power of the purse strings is still there to be used.
And Osit, for one, sees it being used more these days. Kids are “used to getting ‘yeses’ from their parents. Now what I see happening, even with well-off families, is that kids are getting ‘nos’ instead.” Kessel says taking away credit cards or taking other steps to rein in spending can be unpleasant medicine, but it may be what’s needed to teach habits of thrift that a teenager needs to become a self-reliant adult: “As distasteful as it is, unless you want your kid living on your dole at 28, it’s better to take it now.”
Resources
American Institute of Certified Public Accountants’ “Feed the Pig” website;
www.feedthepig.org
Financial Web’s “Saving Money as a Family Unit”:
www.finweb.com/financial-planning/saving-money-as-a-family-unit.html
Generation Text: Raising Well-Adjusted Kids in the Age of Instant Everything by Michael Osit. AMACOM Books, 2008.