The Surprising Challenges of Raising a Kid Who’s an ‘Over-Saver’

We know what you’re thinking: A kid who saves too much? Is there really such a thing? And can that truly be a problem?

Believe it or not, yes, yes and yes.

Most kids probably are in the opposite camp: they’re more than happy to spend every penny they can get their hands on. And if they do save, it’s probably a modest amount. Most likely they’re saving up for something they want to buy later.

However, a small number of kids are extreme about saving money. Parents who have an over-saver know exactly what we’re talking about, and raising them isn’t always a picnic. A few of these kids are natural-born tightwads. Others may have heard family members argue or worry about money. Anxiety about “having enough” can lead these kids to hoard away every cent of their allowance and earnings—just in case.

Why over-saving can backfire

Now, don’t misunderstand: Saving money is an awesome habit. In fact, it’s a critical part of becoming a financially responsible person. However, if saving is the only thing your child does with money, their financial life can get out of balance.

The long-term result: Your kid may carry their over-saving pattern into adulthood. Adult over-savers argue with their spouses or partners over even the smallest purchases. And when an extreme saver needs to make a significant purchase, like a car or a house—watch out! They may get paralyzed by the decision or become overly anxious after writing a big check or signing for a loan.

How to teach kids financial balance

If you’ve got a budding money-hoarder in your family, now’s the time to teach them how to loosen up. (Their future friends and families will thank you!). Here’s how to start:

• Create a beginner’s budget. Budgeting actually is a very calming tool for anxious over-savers. Here’s why: Once kids put money into categories (envelopes, jars, or digital) for specific purposes—friends’ gifts, saving for an electronic item, etc.—that money is “protected.” Your child can now feel comfortable with any leftover money. It’s safe to spend.

• Encourage the “small splurge.” Make this a family ritual so it takes the choice (and associated stress) out of this for kids: Whenever your child gets extra birthday cash or a special check from the grandparents, teach your kid that they are supposed to spend a little of it right away. You can tell them it’s part of showing gratitude for the gift.

Have your child take 10% of the money ($2 out of a $20 gift, for instance) and buy an inexpensive toy or food treat. The amount is small enough that even extreme savers will feel OK spending it.

• Teach them to give. The donating habit is an important one for all kids, but especially for extreme savers. How much or how often is a family choice.

Be sure you help your child separate their “giving” money from their other funds. Keep donation dollars in a special container or a digital category. Setting the money aside this way and adding the label “Donating” or “Giving” helps kids psychologically separate themselves from it. Later, it’ll be a little easier for them to let go of this green.

Again, it’s definitely important to teach kids to save. However, children also need to learn this: Part of having a healthy relationship with money is being able to let go of it responsibly, too.

(photo courtesy © Tauno Tõhk cc2.0)