January 31, 2014
Parents teach their children how to read, ride a bike and tie their shoes because they know their kids will rely on these important skills throughout life. For exactly the same reason, they should also teach their children how to be frugal.
But parents must be careful how they approach these lessons. Going overboard with frugality can send the wrong message. Think twice before buying cheap raisin bran cereal in bulk and spending hours picking out the raisins -- as one Reddit user did with his son -- simply because it's cheaper than individual boxes of raisins. Doing so probably won't be a cherished childhood memory for your kid.
Lecturing your child to be frugal might not be much better. No matter how many times you explain that turning the lights off after leaving a room will lower the electricity bill, it's unlikely to get the job done.
"The most important thing is parents need to lead by example," says Dr. Taliba Foster, a child psychiatrist who has a private practice in Ardmore, Pa., a suburb of Philadelphia. "Being frugal is more of a lifestyle, not a lesson. It has to be part of the family lifestyle."
[Read: Fun Ways to Teach Kids About Money.]
Instead of telling your child that saving money is a good habit, show them why and how. Delaying gratification is one way to show kids the benefits of saving money. Take the money you would use buying a toy that your children beg for at the store and save it for a family vacation several months down the road.
Parents have many other ways to teach their children about saving money. Here are 10 easy lessons you should try:
Set a savings goal. By itself, a savings goal doesn't sound like much of a way to be frugal. But a goal, such as saving for a vacation to Disneyland, can be a way to get kids to see the benefits of saving money for other purposes. Foster, who has an 8-year-old daughter, says she uses this when her daughter wants something at the store. If they decide it's a "want" instead of a "need," Foster will point out that the money would be better saved by the family for a Disneyland vacation.
Since children want to please an authority figure during preadolescence, it's a key time to try to teach them smart financial habits, she says. "Right now, they're really ripe for following rules, the difference between right and wrong," Foster says.
Get a library card. Going to the library to check out books and DVDs is a habit every family can use to save money. It saves on buying books and renting movies, even though it may take a few weeks on a waiting list to get the latest releases.
Kristen Hagopian, a talk-show host in Philadelphia with two children, ages 9 and 6, estimates that a family of four will spend $720 a year if they share a tub of popcorn and two large sodas while watching a movie at the theater once a month. The same family will spend $180 a year, she says, if they buy a $15 DVD each month. Watching movies for free at home is clearly a lot cheaper.
[Read; 15 Ultra-Frugal Money Saving Tips.]
No drinks. When you do go out to eat, show your children the price difference when you order water with your meal instead of buying a drink like soda, juice or lemonade. Jamie Ratner, founder of Certifikid.com, a deal site for parents, says she never ordered drinks when she was growing up. Now when she takes her children, ages 4 and 6, out to restaurants they have free water. "We save a fortune on our tabs at meals just by getting water," Ratner says.
Price comparison. Showing a child that time is worth money can be difficult, but comparison shopping can help get that message across to them. The more money saved, the less you'll have to work for that money. The less you have to work, the more time you can spend with your family or doing other things you enjoy.
"Teaching your child that their time is a currency, just like money, can be very powerful," says Denise Winston of Bakersfield, Calif., who owns the website MoneyStartHere.com. "Taking a few minutes to research a product to find the best price, and if it gets good reviews, translates into money saved that you don't have to earn. This also helps you plan for purchases and teaches delayed gratification."
Shop from the low shelves. The grocery store is full of money lessons, and is an excellent place to practice math skills. Sherry Thomas of Boca Raton, Fla., president of Palm Beach Etiquette, a life skills training business, says she used supermarkets to teach her children, now 17 and 19, to find the best bargains on the lower shelves.
"The supermarkets make more money if you purchase what costs more," Thomas says. "We tend to buy what is within our sightline. So, if we don't see it, we don't buy it. Thus, the savings are usually lower on shelves that are more difficult to see."
She also had her children pick up a 1-pound bag of rice and a 2-pound bag, comparing which would cost less for the long term. Sometimes two 8-ounce cans of a particular food costs less than one 16-ounce can, for example.
Stay organized. Leaving piles of things around the house not only leads families to become messy and disorganized, but it can also cost them money. Teaching your children the habit of putting clothes, toys and other items where they belong helps you keep track of your belongings, which saves you money because you don't have to replace them or buy more stuff because you can't find what they already own, says Sarah Mooers, a professional organizer who owns a business called Organized Efficiency in Ambler, Penn.
"In one small office, I reorganized their stationery and supplies closet, and their spending on stationery went down dramatically for six months while they worked off the piles of paper and envelopes they didn't even know they had," says Mooers, whose children are 8 and 3. "The same is true in homes -- women who cannot find all their winter shoes when winter rolls around again have to go out and buy new ones."
[Read: Kids Learn From Parents' Money Mistakes.]
Save a little of everything you earn. It can be as simple as having a family coin jar that everyone drops their change into at the end of the day so they can save for a meal out. Or it can mean taking your child to the bank each week to deposit half of an allowance into his or her savings account.
Ozeme Bonnette of Fresno, Calif., has been saving a portion of everything she earns as part of a family lesson her grandfather started by teaching her dad when he was a boy. The savings lesson has helped family members afford buying something on a whim or handle an emergency. Bonnette's daughter, 10, saves 10 percent of her weekly allowance and money she gets at birthdays and Christmas, which has helped her amass hundreds of dollars in savings.
Thrift store shopping. Like shopping at a grocery store, shopping for deals at thrift stores, yard sales and flea markets can be frugal lessons that will stick with kids even after they become an adult. Kenyetta Kelley, owner of Luvvy Public Relations, doesn't have children yet, but says she learned as a kid how to find quality, long-lasting items at thrift stores.
"I do remember buying children's books as a kid at these places, but I didn't enjoy going back then as much as I do now," says Kelley, who lives in Dothan, Ala.
Set an allowance. As soon as children can grasp the concept of an allowance -- for some, this is as young as age 3 or 4 -- it's a good idea to have them to do chores at home so that they learn the responsibilities of being part of a family, says Kim Abraham, a mental health therapist in Flint, Mich., who specializes in treating families and children. Abraham gives her children "responsibilities" not "chores," and they're paid for as much work as they do.
If they're not earning money, children can get a sense of entitlement from parents who enjoy the good feeling of giving them something, she says. "The only thing the child is learning is the joy of receiving," Abraham says.
The worst case is raising a child who is either too dependent on their parents for everything and never wants to move out of the house, or an independent child who doesn't have empathy and doesn't work well on a team.
"What we really, really want is to raise interdependent people" who trust others and work well with them, she says. Earning an allowance with responsibilities at home can help get them there, she says.
Don't buy something just because it's on sale. If you don't need something, it's not a bargain. Instead of saving 50 percent when something's on sale, save 100 percent by not buying it at all. It's a lesson that Alina Adams, who writes about being frugal in New York City for Examiner.com, has instilled in her children, ages 14, 10 and 7.
"My grandfather used to say, 'When they have a 100 percent sale, call me,'" says Adams, who first encountered the concept of sales and having a choice in what to buy when she emigrated from the Soviet Union to the United States in the 1970s. Her children now accept the lesson.
"They've internalized it to a point where, when one says they 'need' something, another will pipe up to say, 'Or do you just want it,'" Adams says. "And then, when we decide the item isn't really necessary, one of them will observe, 'We've saved 100 percent!'"
Of all of these frugal lessons, maybe the best is to value time, not just monetarily, but with the time you're able to spend with your children. It's invaluable and spending time with your children teaching them smart money habits, instead of buying them a book or new gadget, is time well spent.