Just last night, I received this glorious text from one of my sons in college:
“Can you transfer $800 to my savings? I don’t want to spend it.”
Umm. Let me think about tha... YESSSSSS!!!
You see, my son has been working a part time job during the school year. Compensation includes a share of the cash in the tip jar at the end of each shift.
That’s just the kind of money that tends to evaporate in a college environment. The cash is at your fingertips. Tip income feels like an extra “bonus.” Dropping bucks here and there with your buddies is a constant lure. On the other hand, accumulating cash in your wallet, loading it on to your spending card, and requesting your dad to whisk it away to savings seems almost inconceivable.
I have to admit, I’m one proud papa to receive a text like that. I never would have sent a text message like that when I was in college. (Let’s just ignore the fact that text messaging didn’t even exist back then.)
So, how can you set the stage for receiving a similarly glorious text message from your future college student someday? Every parent’s mileage may vary (kids are different!), but here are a few things that certainly increased the odds in my case:
- Starting early, talking often. I opened a virtual family banking account for my son when he was 7 years old. That was the start of an ongoing personal finance dialog. 14 years and counting. The sooner you start talking openly about money with your kids, the better.
- Establishing a separate savings bucket. Savings won’t survive when it’s mixed in with spending. Teach your kids how to separate their funds into compartments with specific purposes. Start with the standard three: spending, saving, and giving.
- Splitting income between buckets. Whenever income rolls in — be it allowance, chore payments, odd job income, or birthday checks from grandma — instill the habit of allocating each deposit between the different buckets. Be sure to let your child have a say in what that allocation looks like. They just might surprise you.
- Rewarding saving with aggressive parent paid interest. Show your kids the power of compound interest in a timeframe they can appreciate. A traditional bank savings account with near zero annual interest rates simply won’t cut it. Pay interest on your kid’s savings yourself. Be generous and frequent to make the point.
Who knows? If you set the savings stage early, you might just look forward to texts from your college kids about money, instead of dreading them like most parents.
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