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Once your child masters the basic concepts of money and how to save it, they might be ready to approach the notion of a savings plan. A savings plan is what adults refer to more commonly as a budget. But if you’ve just recently introduced the concepts of money and saving to your kids, presenting them with the idea of a savings plan is perhaps a more natural next step. We recommend starting with one achievable, short-term goal, and seeing that through to completion. Are you ready to help them with their first savings plan? Here are three simple steps to make it happen.
Create a Savings Plan Together
Your child will most-likely need help getting started. You can start by working with them to choose the item they would like to save up for. It should be something they’re excited about and something they can afford over a reasonable period of time. Once you have agreed upon the item and the timeframe, make sure they understand how much the item costs and how long it will take to save. These details are vital to their success. Come to a decision together about how much money they will set aside on a regular basis and how much they will have saved at the end of the time period. For example, they might put $2 of their weekly $5 allowance in a piggy bank every Sunday. Let them know they can expect to have saved $8 at the end of four weeks.
Help Them Visualize Their Progress
Make a chart with a picture of the item your child is saving for, and track their savings activity so they can visualize their progress. Also provide a place for them to save. This might be a jar, a piggy bank, or a savings account. Younger children might have more success with a translucent container so they can actually see the accumulation of dollars and coins.
Praise Them for a Job Well Done
Encourage your child along the way. Remember that, for some kids, time tends to pass slowly. Two weeks might breeze by for an adult, but can seem like a lifetime for a younger child. Stick to the time period you have agreed upon, and remind them that the day they are saving up for will indeed arrive. Praise them for their patience and accomplishments along the way, and remember to follow up with them once they have achieved their goal.
Adhering to a budget, or executing a savings plan, takes practice. If you can work together with your child to create an achievable savings plan, visualize their progress, and ensure they reach their end goal, you’ll be helping to set them up for success.