I am sometimes astonished at how many adults struggle to maturely and effectively manage their money. Truth is, the value of money, and how to manage it, is a lesson best learned at a young age. And today, in honor of National Teach Children to Save Day, I want to share a simple formula and system for teaching fiscal responsibility to children.
As promised in my last post where I announced the giveaway winner for the Spring Cleaning planning cards. Another CONGRATS to Mary and special thank you to all my followers!
National Teach Children to Save Day. A day of recognition I wish got more attention and publicity.
How many people make a conscious effort to teach their children about saving, from a young age?
I don’t recall my parents sitting me down for a discussion on fiscal responsibility. What I do remember is a question posed to me from my mother, which continues to ring in my head today. “What do you have to show for the money you spent?”.
I grew up in a small down and at a pretty young age was granted permission to walk to our little downtown shopping area by myself. Well, generally with a neighborhood friend. Within close walking distance was a fuel station and a little department store by the name of Alco. With a small amount of money in hand we would set off on our shopping adventures and return home with…junk. Mostly candy. Sometimes blue press on nails.
With candy quickly ingested and press on nails lost within a matter of hours, the point my mom made was a valid one. In almost no time I had nothing to show for the money I’d spent.
Teach Children to Save: Giving/Saving/Spending Formula
I tend to like this formula when it comes to money allocation:
Giving 10% + Saving 15% + Spending 75% = 100%
For adults with many monthly financial obligations, or older children who may have a monthly bill or two they are responsible for, it’s the leftover money that’s allocated per the above formula.
Adults know the benefit of having some savings cushion for unexpected expenses. If children are taught early, they not only learn this invaluable skill but will also have a nice bit of padding when they enter their adult years.
Regardless of how your children “come into” the money they possess (allowance for extra chores, babysitting, monetary gifts for birthdays, etc.), consider talking with them about the above formula and set up a system for keeping track. Here’s a simple idea:
Mason jars with the following labels: Save, Give, Spend.
As children acquire money, take time to calculate how much will go into each jar. Pending the age of your child, you may also open a savings account in their name and deposit their “save” money monthly/quarterly/annually.
A careful reminder for the kiddos: money in their spending jar doesn’t necessarily mean they run right out and spend every dime. On the contrary, this money may well be saved up over time for something they desire to buy.
Learning to save toward a goal (which is not the same as the ‘save’ jar where the point is to build up a cushion for an unexpected or significant expense down the road) is another invaluable lesson. Parents must be careful not to make every purchase for every little thing their child desires, otherwise the value of money isn’t learned.
If Giving hasn’t been part of the equation you are familiar with, I encourage you to consider this addition. It’s character building when children learn the gift of giving. It’s also an awesome opportunity to engage your child in conversation about those less fortunate. You can really make an event out of giving with your child as well. Something they help choose, that is hands on and fun can motivate future giving.
Maybe you don’t have time for a conversation with your little ones about Giving/Saving/Spending today – but I encourage you to make time. Soon! And for those whose kiddos are a touch too young (younger than 4 years of age), be thinking about your plan for teaching children to save in the future.
Anyone have other suggestions/tips/tricks used for teaching children to save? We’d love to hear from you – comment below!