Turn your kids into super-savers: six tips for parents
It’s an important lesson for kids of all ages to learn that money has limits – there isn’t a money tree. And learning how to make the most of our money, through the power of saving, is a tremendous lesson to share with children. Teaching children how to save should include lessons on setting short-term and long-term savings goals, making their money work for them at the bank, and allowing them to have small failures with their own money.
Here are six tips for teaching your children to “power save” and make the most of their money – now and in the future.
1. Give your child an allowance
Giving an allowance is a great way to help your children become more conscious about money and allows them to discover the power of saving. You can start giving an allowance as early as first grade, so that they get to have experiences with money when it’s still fun.
Encourage them to take baby-sitting and lawn-cutting jobs, so they can start earning money to add to their allowance. Then help them allocate their allowance. I suggest four categories:
- Tithe: Give 10 percent of their allowance to someone in need.
- Immediate gratification: 30 percent can be spent on anything they want right away.
- Delayed gratification: 30 percent should be saved for more costly items.
- Big dreams: 30 percent on long-term goals, like college, or a trip to South America when they are 16.
Each portion of the allowance has its own purpose and a lesson to be learned.
When you give your children an allowance and the freedom to do anything with it, they will quickly find out about the need to budget and spend wisely.
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