Yes, you heard it correctly. Teaching your daughter about savings will benefit both of you. She’ll learn life long principles and you’ll save more in your OWN retirement. #Intergenerationalwealth baby!
How do you get her started?
1. Open a fee-free savings account. This step helps her start thinking long term to save money from holiday gifts and birthday presents. Make sure you find an account that is free for kids. Talk to someone in your local savings bank. Check out credit unions. Try online banks. Or do a quick google search “Savings accounts for kids”.
2. Make a game of it. This is the trick. If you make it painful, she won’t play. Human nature keeps us motivated when things are fun and can you can win prizes. But if you make a game of it, she’ll look for ways to win.
Read below for ideas on how to make it like “kid’s play”
There are a number of ways that you can get started and help her fund her new savings account. Consider the options below and find a fun way to track your wins so that she gets excited about her options.
Match whatever money she saves from her allowance or earns from gifts.
You can opt for 100% matches or even 10 or 20% if you have multiple kids. The amount doesn’t matter. Remind her that it’s “free” money for making wise spending decisions
Pay her for chores
I don’t recommend paying her for all of her chores as it might lessen the habits. But consider giving her extra bonuses when she goes above and beyond her normal chores or volunteers to help out and you want to acknowledge her.
Talk about the percentage she will keep after all of her sales are finished and she pays back her expenses. Then add the extra to her savings account.
You can get really into the topic and start teaching her how interest works and the power of 72. My favorite lesson for youth about interest is the 2k a year lesson. Because this is a game-changer for retirement if you do some simple math. Dave Ramsey has a great article on the topic
Here are a few other resources if you really want to dive in.
Whether you just keep it a “savings” game or decide to dive in deep, something interesting will start to happen in your own financial world. You’ll start saving more because you are focused on it.
It will happen very naturally. Because what you focus on grows. So pay attention to what you are focusing on. Because everyone knows that your daughter never does what you say. She will do what you DO.
Use it to your advantage!
Have you started saving at work?
- I know you are busy. But make sure you have checked your own benefits package and you are having automatic payroll deductions with your retirement accounts at work.
- Don’t stress if you haven’t started already. Today is a new day and every dollar will add up.
- Don’t stress the amount. 1% is a place to start. It will start adding up quickly and you’ll be surprised how you wont miss the money in your regular paycheck.
- If your company doesn’t match your contributions, do it anyway. You’ll see a tax savings at the end of the year.
If your company doesn’t offer a plan
- Start an IRA. You can set aside money every year and have it deducted from your taxes
- Set up an automatic deduction. Otherwise you’ll tell yourself that you’ll do it and never get around to it.
- Reward yourself with every paycheck. Rewards can be simple. Take an extra long bath and don’t feel an ounce of guilt if the kids sit in front of the TV or play on their phone during this time.
The biggest lesson here is to get started and make it regular. Don’t worry about how small the amounts look. And don’t get too focused on how big the goal looks. Just get started.