The month of April is Financial Literacy for Youth Month, and one event marking the occasion is Teach Children to Save Day.
Now, there's a challenge. Saving can be a downer, especially for children, who crave instant gratification even more than adults. If saving is spinach and spending is dessert, which would your kids choose?
As my contribution to teaching kids to be thrifty, here's a foolproof method for sugarcoating the spinach to make it go down more easily:
Give kids a reason to save. It's tough to put money aside just because it's a virtuous thing to do. Even adults need to save money for a goal, whether it's a family vacation or your own retirement. Kids aren't any different. As my son once said to me, "Saving can be fun, too, if you're saving for something you want."
The younger the child, the smaller and more immediate the goal should be — a toy car or a set of paints for an elementary-school child, moving up to a video game or CD player for an older kid. Or when your son tells you he simply must have a pair of $100-plus sneakers, tell him you'll pay a portion of the tab if he picks up the rest.
This is crucial: Once kids have actually saved up enough, let them spend their money on the coveted item, even if the purchase cleans them out.
Set up a simple system. Unless you're extremely well organized, don't get bogged down in complex accounting methods that require kids to divvy up their allowance into short-term saving, long-term saving and ultralong-term saving.
It's better to start with something easy to calculate and keep track of — such as having your kids save a flat 10 percent of their income. That's a good rule of thumb for adults, too.
Or you might choose the spare-change method, which lets kids spend their paper money but encourages them to save their coins, which eventually can be rolled and taken to the bank, or converted into bills and used for a special treat.
Reward their efforts. Sometimes all it takes is a pat on the back to push kids in the right direction, but tangible rewards never hurt. One of the most effective ways of encouraging kids to save is to offer to match all or part of the money they set aside.
Have a question about kids and finances for Dr. Tightwad? Write to Dr. T at 1729 H St., N.W., Washington, DC 20006. Or send the good doctor an e-mail message (and any other questions for this column) to jbodnar@kiplinger.com.