Teach Your Child to Save Money at an Early Age
Teach Your Child to Save Money at an Early Age
Children often see their parents at the bank, the source of unlimited withdrawals for whatever they want. They don't understand that there are consequences for spending too much money. And they don't understand the idea of making deposits.
Parents have to overcome that by teaching addition and subtraction, and they can do that by using a reward system. The fundamentalist Christian community promoted an idea that's now become more mainstream, and I love it. The idea is to have three jars of money. You give your child a certain amount of money, and it's split among the three jars - spending, saving and charity. In the fundamentalist model, 10 cents of every dollar goes to the charity and the child gets to choose the charity. So if your child loves animals, you could designate that 10 percent to the Humane Society. The other 90 cents is split in half, with 45 cents going to savings and 45 cents to be spent however the child wishes. The savings jar could be for a stereo system, a bicycle, or some other long-term goal that eventually will give the child a reward for saving.
The next question is how that money is "earned". Some parents like to give it in exchange for the child completing certain household chores. Others believe the child has the right to share in some of the family's income. Or it could be a combination of both. Whatever you feel is right, make sure that your child learns the value of hard earned money.
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