The new year is a time for goal setting, and saving more money is our most common resolution this year.
Regarding the question, "How can I convince my kids and teens to be among the 23% who have resolved to save more this year?" *1
To start, do it yourself.
"It’s not enough to just talk about saving – kids need examples”
Setting a good example 💌
The research on the importance of financial socialization in families is well documented.*²
Children learn about money through three methods:
Instruction
Observation
Practice
But it's not enough to just talk about savings in theory; for the lessons to really sink in, kids need to know how to prioritize savings.
According to a recent study from BYU, setting a good example and providing experiences are the most effective ways to prepare young people for their future financial decisions.*³
To set an example, remind kids about the importance of budgeting to meet goals. You might express that you are using a 50-30-20 model for needs, wants, and savings. But don't stop with the discussion. Talking is not enough.
Show kids and teens how you pay yourself first – via automatic transfer, round-ups, or another saving method – to ensure that you'll reach your 20% goal. Set a good example so your kids can observe you saving.
"The right tools provide the practice for future financial well-being"
Providing tools 🛠
Just as you have tools to help you manage your finances, so should kids and teens. The right tools help them gain the practice that's critical for future financial well-being.
Encourage your kids and teens to set a savings goal for 2024. Please help them to think about reasons to save. Younger children might save for a particular item, whereas teens might save for future goals like college.
Make sure that they have a regular allowance or are using direct deposit from their paychecks so that they can watch their savings grow.
It's critical for kids to have access to money so that they can put the theory into practice.
By setting a savings goal, your kids can easily accomplish their New Year's resolution for 2024 and reach future financial capability.
Sources;
1. YouGov