Urge Your Kids to Save or to Spend?

Your daughter receives $25.00 from her grandmother on her birthday. 

Your son opens a card to find $20 from a friend of the family. How do you teach your child to be fiscally responsible and not want to spend it all immediately on video games and candy?

Studies have shown that one of the major determiners to a child’s success in the future is learning how to save money. Not necessarily because they will have lots of cash when they get older by saving up birthday money from Uncle Ted, but because of the self control learned as a result.

Delaying the instant gratification allows a child to study, to plan, to be patient. That self-control, studies have found, can be a bigger determinant to your child's long term success than intelligence or socio-economic status.

The results of an extensive study released earlier this year that followed 1000 people from birth to 32 years of age. It found that self-control can have an enormous impact on your child's life.

An abstract accompanying the study published in the Proceedings of the National Academy of Sciences of the United States of America said self-control "predicts physical health, substance dependence, personal finances and criminal offending outcomes."

So how do you do teach self-control when it comes to their money?

With our daughters, we tried to be good examples by not always buying whatever we wanted, discussing our saving and not spending, and by NOT always giving the girls everything they wanted and all their friends had.

They became very smart shoppers. I’ll never forget my eldest as an eight-year-old being in the Toys R Us with $30 of birthday money and a calculator, going over and over with me what she could buy to get the most for her money. Today, both girls have a healthy bank account and still plan for their purchases with their hard-earned (or gift) money.