It's important for all of us to have a healthy relationship with money - that means learning not just to save, but also how, what and when to spend! When your child receives some money, either through an allowance, small jobs or holiday gifts, begin talking to them about splitting the amount up into SPEND and SAVE money. Kids as young as eight to ten years old can understand the concept of portioning out money between an amount to spend and an amount to save. Keep SPEND and SAVE money each in their own separate space - maybe SPEND money goes in a wallet or a purse that can go with the child, and SAVE money goes in a special envelope along with some special tools to keep track of it.
Teach Living Within Your Means
SPEND money is just as special as SAVE money and it's for everyday spending in a kid's life. When you help your child decide how to divide their money, talk about what types of things he likes to buy and how much each costs. This will help set expectations for all future shopping trips. If your son would like to buy some bubble gum or a new comic book every week with his money, make sure the amount he portions to his SPEND account is enough. Don't forget that although we might feel different right now, spending (within your means) can be as important a lesson as saving, so celebrate his spending money with a new tradition - maybe a special ride each week so that he can buy his own soft pretzel or book with his money.
Saving For a Big Day
SAVING money is a lesson many could benefit from, so starting to sow those seeds now with kids will provide a world of benefit later. The SAVE category is for larger items that your child wants, but are slightly beyond her means. Take a moment to talk with your daughter about what she would like to save for and how much it costs. Write down her goals on a piece of paper that lives with her SAVE money as well as how long she will have to continue to save at her current rate. Once again, this sets expectations and teaches several lessons at once, not the least of which is that sometimes you need to wait to purchase something you really want.
Saving is hard - make it easier by providing her with some of the same incentives that we have as adults. Just like we, as parents, invest our savings in a CD or mutual fund, expect to be paid interest. You can apply this same principle to the money your child saves. Tell her that you will pay interest at the end of each month on the amount that she saves. You can choose what this interest payment is. I pay my kids 1% at the end of each month because it's easy for both me and my kids to calculate, but many parents choose the "matching program" in which they tell their children to save half for a special purchase and then match it. Whatever program you develop, I can assure you it will surely improve your child's saving rate, and truly reinforce for your child the positive effects of saving.
Helpful Tips
There are many ways to split dollars between spend and save, but keep these things in mind:
Talk with your child about what kind of items he should SPEND on and how much money that would be.
If your child receives a regular allowance, make sure that your child chooses a spend amount (and spend items) that will last until the next allowance payment.
If money comes less regularly, like birthdays and holidays, plan a little bit in advance so that your child is not overwhelmed by a sudden influx of money. If the occasion is one where your child may receive a large amount of money (bar mitzvah or communion) discuss in advance what you and your child may want to do with the money. Some money may go into SPEND for some special items he's been waiting for, and some may go to SAVE for the future and some might even go into a college savings account!
By Beth D'Andrea
Article Source: http://EzineArticles.com/4323388
Related Video :
No comments:
Post a Comment