Author: Danielle Pacheco
Every parent knows how rewarding it is to see their little ones grow, however there is one reward that parenting does not necessarily provide a financial one. If you are a parent, then you know how expensive it can be to raise a child. CNN reported that last year in the US, the cost to raise a child had risen by 40% in the last 10 years and is expected to continue rising.
It’s very easy to spoil our children with material things and buy them whatever they want. Whether it be the newest video game or the hottest fashion trend; after all, we don’t ever want them to feel “left out” right? As adults, we need to ensure that we are doing our part to teach our children the value of money and the importance of hard work. Of course, the age of your child will determine how you can help them to understand this very valuable lesson.
As they get older, there are many creative ways to help them appreciate how hard parents work to provide them with both their wants and needs. Small chores around the house is a great place to start. I have an almost three-year-old and from the time she could walk, I’ve been giving her little ‘chores’ to do, like putting her own dirty clothes in the hamper at bath time and putting her toys away (the majority of them anyway). Of course, she doesn’t understand that these are chores and the only reward she receives is praise (which she loves). But as she gets older, I will give her more things to do around the house and she will receive an allowance as her reward.
When I was younger, I was given $10 each week for cleaning my room and making my bed every day, and I can still remember not enjoying either task but keeping that $10 in mind really got me through the not so enjoyable tasks! To a kid, being told to save without explaining why, may seem pointless. Helping children define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. For example; if they want to buy a $50 video game and they get a $10 allowance each week, help them to figure out how long it will take them to reach that goal.
I am a firm believer that history repeats itself. In most cases, children tend to follow in the footsteps of their parents. They may like the same sports team as mom or dad (because rarely both mom and dad like the same one, right?), have the same goals and aspirations and even the same money management skills. Saving money is a habit that takes time to build, even some adults have yet to master it. After all, it’s much easier and more enjoyable to take your income, the money that you have worked so hard to receive and spend it to purchase whatever you desire without thinking about the future, and any long term goals you may have.
One of my favourite expressions is, “Always expect the unexpected”. While it’s so easy to get caught up in the here and now, it’s important to think about your future. Between today and the conclusion of our income earning days, a lot can and will happen; We could lose our job, take a pay increase or decrease, move or even become disabled and not be able to work. A perfect example of the “unexpected” would be that just four weeks ago, I was sitting in my office and now I’m writing this article from home.
Strategising about the income we make now, to make plans for the future is one of the best things that we can do with our hard-earned money, and an excellent example to set for the little eyes watching us. While retirement may be decades away, you should start saving for it as soon as possible; it’s never too early to start. Set a realistic budget for yourself and try your best to stick to it and not dip into it.
Be sure to include a budget for both wants and needs and try not to overextend yourself. In your younger years, when you have less expenses you should be able to save more to create a good cushion for yourself as your financial responsibilities increase. I.e. you have children, purchase your first home etc. and may not be able to put aside as much. Online savings calculators are a great tool and they can assist by showing you what you will need to set aside per month in order to reach a long-term goal if you have a particular one in mind. Or, if you know you can afford to set aside a certain amount per month, what that would look like for your goal date.
Get your kids involved in financial planning. You could decide to save for something together, such as a family vacation. According to a T. Rowe Price study conducted in 2019, 44% of parents said they’d never talked to their children about the value of money. If you want your kids to learn about saving, it must be an ongoing discussion. In the same survey, 10% of parents said they had zero savings for retirement, emergencies, college, or other financial goals. If you want your children to become savers, being one yourself can help, because as parents we want to provide the best example for our children, right? If you’re a parent, making saving a regular part of your child’s routine will lay the foundation for a bright financial future.
Danielle Pacheco is a Pension Sales Advisor at Freisenbruch Meyer. If you would like any further details, please contact her at firstname.lastname@example.org or 441-294-4660. BPM