4 Ways to Help Big Spenders See the Value of Saving

Many kids see saving as the most un-fun part of having their own money. Totally understandable. Many adults aren’t wild about saving money, either. However, saving is definitely an important 1/3 of the Key Three Money Skills: spending, saving, and giving.

To be fair, the saving skill may be a bit harder to teach kids who are natural-born spenders. And yes, it is possible for a human to be wired as either a natural spender or a natural saver. Parenting odds being what they are, there’s also a pretty good chance that your kid’s inborn money temperament is the polar opposite of yours. So if you’re a great saver, your kid probably can’t wait to spend his green on anything that floats in front of him.

If your child happens to be a natural saver or even an over-saver—appreciate your good fortune! But if you’re raising a happy-go-lucky spender, these tips are just for you:

1. Create a saving system

Spenders can be impulsive with their money. Nuf said. So make it easier for your child to do the right thing by putting up some financial guardrails. You essentially want to create automatic habits, or systems, to guide your kid to save.

Every time your child gets an allowance, earns money from work, or gets money gifts from relatives, make it a rule that 10% (or whatever ratio you choose) of it always goes into savings. No exceptions.

Next, make sure your child’s savings are in a separate account, jar, bank or digital category from any spending money. The guiding principle here: “Out of sight, out of mind.” Kids aren’t as tempted to spend what they don’t see. And by the way, the system of automatically transferring money from a spending account to a savings account works great for natural-spender grownups, too. Just sayin’.

2. Incentivize Their Savings

This is the reward system at its best, used to teach your kid financial smarts. Whenever your child puts money in savings, consider matching a portion of it. If they put in $1, you add an extra 50 cents. If they save $10, you add another $5 to sweeten the pot. Your kids will quickly come to see the saving habit as a very, very good thing.

Yes, your child will earn some interest on their money, if they put it into a savings account of some type. However, interest rates are low enough right now that your child might not get excited about earning an extra 12 cents a month. Your match makes savings much more exciting.

3. Teach Kids About the “Future Value of Money”

This is a good conversation to have with kids who are in late grade school or middle school. The main lesson: Over a long period of time (years, not just months), the build-up of compound interestand perhaps parental matching fundson your child’s savings means they’ll earn lots of extra “free” future money.

Here’s an example. The average kid gets an average allowance of $68 per month.

If your kid hypothetically could save that entire allowance from age 8 to age 18, they would have a whopping $14,230* by the time they go to college—without even taking on a part-time job.

The “future value” of your kid’s humble $68 monthly allowance becomes more than $14,000 in 10 years. And more than $6,000 of that sum is “free” money from interest and parental matches. That’s a pretty compelling reason for kids to save.

Put another way: If your child spends every penny of their $68 allowance, they’re also erasing more than $6,000 in future money. Yikes!

4. Walk the Talk

You’re your kid’s best teacher. If you want them to understand how to save, let them see you do it. Talk out loud about saving money for that new flat-screen TV or your next family vacation.

Better yet, create a colorful savings graph and post it prominently on your refrigerator. Mark your family’s progress toward that family vacation. Celebrate your savings milestones along the way.

Help your kids (and yourselves!) see that good money things come to those who save.

* Assuming a 10% return, compounded monthly

(photo courtesy © Rich Brooks cc2.0)

Using your kids’ debit cards to talk about money this summer

The money talk — not as scary as the birds and bees, but still a big deal.  In fact, 49% of parents say they’re not sure how to explain money to their kids [1]. Enter: Summer Break. More time at home means more time to talk about money management. Follow along for some conversation starters and tips on how to have the money talk.

EXPLAIN WHY BUDGETING IS IMPORTANT

79% of Americans keep a budget [2], which is great. Budgets may be a bit more involved for grownups, but that doesn’t mean your kids can’t start learning the basics. How? Start off by explaining why budgeting matters. There’s a good chance they’re already wondering that.

Conversation Starter: “What’s something you really want but you haven’t had the money to buy?” Maybe it’s something you can’t fit into your parent budget, or maybe it’s something you think they should buy on their own. During the summer, there are lots of opportunities for your kids to make money — help them figure out how to manage their earnings.

BREAK DOWN COMMON BUDGETING TERMS

Fixed expenses and variable expenses — ring a bell? Maybe, maybe not. Either way, these are important words to teach your kids about budgeting. Break it down into Summer Break terms and they’ll get it.

Conversation Starter: “A fixed expense is one that doesn’t change. Like, our Netflix subscription. It’s the same price every month. A variable expense is one that does change. Like, a meal at a restaurant. It can go up or down, depending on where we eat.”

TALK ABOUT SAVING MONEY

Budgeting for Summer Break is one thing — saving for it is another. Instead of handing over a wad of cash and hoping they stash it away, make it a hands-on experience with a bit of fun along the way.

Conversation Starter: “Saving money lets you buy things that you might not have enough money for right now. When you add a little bit of money to your savings over time, it adds up so you can buy those things one day.” Tip: Help your kids make a savings goal (or better, lots of goals). Then, work together to plan out how they’ll reach that goal.

GIVE KIDS THEIR OWN DEBIT CARD

The fun part about the money talk is giving your kids their own debit card. Unlike a credit card, they can only spend what’s on it. The best part? They won’t realize that they’re learning valuable lessons every time they use their card — but trust us, they are.

With the Greenlight debit card and app, your kids can:

  • Set savings goals.
  • Learn to make trade-off decisions. Keychain or shark-tooth necklace? It’s their call.
  • Earn allowance through chores. Cool fact: Greenlight kids who earn allowance save 26% more. Woohoo!

A few other things you can do in your app:

  • Manage access to ATMs. Are they withdrawing a bit too much? Set limits.
  • Choose stores. You decide where they can and can’t spend. Gas only? Just at restaurants? Adjust the settings in your app.
  • Get real-time notifications and monitor their spend levels.

GET SET FOR SUMMER

Join Greenlight today and help your kids get a head start on budgeting for their Summer Break — and for life! Sign up now

[1] Investopedia.com [2] Debt.com

Everything you need to know about National Decision Day

For many high school seniors, May 1st is an important day: National Decision Day. It’s the day they decide what comes after high school — the first of many big decisions they’ll make for themselves. This year, it also marks a day in which their decisions are heavily impacted by the world around us. 

They did the work, took the tests, made it through the teenage years and now have their sights set on graduating high school. While you and your family explore different ways to commemorate this milestone (perhaps with video calls and virtual graduation parties?), we hope you can still find time to talk about the next chapter of your child’s life.

The new-age debate

Our Gen Zs live in a world of entrepreneurs and self-starters. They’re seeing success as seven-year-old YouTube influencers make millions and 16-year-olds start their own companies.

So it makes sense why your kids will have different thoughts and considerations surrounding the college talk. That’s not to say that they don’t want to go to college — they just may not see it as the only option. As parents, we need to listen to that so we can guide them toward a decision that we all feel good about.

To sign or not to sign? What to consider

The college talk isn’t just on National Decision Day — it’s year-round. It’s a good idea to stay in the loop with the merging views on the subject. When you delve into the college talk, you may come across split views on a few things: 

Student loans: 

Because every financial situation is different, student loans are a hot button for many parents. If you and your kids are thinking about student loans, take time to explore every avenue and talk about how it will impact them throughout and after college. 

In 2018, the average individual student loan amount was $29,200. Loans may or may not be an option for your family. Either way, National Decision Day is a great opportunity to talk through the numbers with your soon-to-be grad. 

Public vs. private vs. community:

The good news is we’ve got lots of options. The not-so-good news? Well, it’s hard to decide! It’s no secret that most private schools come with a heavy cost and community schools are typically the most affordable. Public schools tend to sit somewhere in the middle of the two. 

Talk to your kids about finances — how they’ll be managing their money throughout college, pros and cons of an expensive school and what matters most to them. Your conversation could bring you to a cost-benefit analysis (bonus!) or it could spark up a new outlook on the entire decision-making process. 

Career analysis: 

Anyone else feel like their kids are too young to decide on a career path? In many ways, they are. That being said, they may have a different perspective. 91% of high schoolers believe they know their dream job, according to a survey done by EY and Junior Achievement. 

To them, a career is fun, exciting and adulty (their word, not ours). You know better than them that careers are not just about fun — they’re about financial security and stability. 

The transition out of high school is a prime time to have an open, honest conversation with your kids about this. You have the best insight into your kids’ strengths and interests, and you can use this knowledge to help them choose a path that will give them the biggest return on investment. (Props to you if you can make ROI sound fun!) 

Looking for a way to start the conversation? Try these: 

“Are we there yet?”

You’ve got a lot to think about, but no need to stress about it. National Decision Day is an exciting time for you and your kids. No matter what path they choose, the most important thing is that they have you. 

And… they have Greenlight! They may be growing up, but that doesn’t mean it’s time to stop helping them make wise money decisions. If you haven’t already, join Greenlight to keep your kids financially-healthy and happy throughout this next chapter of their lives.