Teaching Kids to Save Money

**snafu** · 07-22-2013, 06:42 PM

I hope you'll start teaching DKs about money as soon as they understand the concept. My dad gave us money for them for every celebratory occasion so we started a college investment account as soon we assembled the required opening balance.

We had DSs do daily age appropriate chores as pre schoolers with some done for 'pay' so long as there was no grumbling. They learned that 10% of income went into a 'savings' jar and about half went into a long term goal 'piggy' bank. They could spend the remaining on anything they wished. This all started because their great grandmother insisted on giving them money every time she saw them. Once they were able to read they chose chores and resultant 'pay.' In middle school they shovelled driveways in winter and cut grass in summer. As 5th graders they did a segment on 'finance' in math class and agreed to contribute 'savings' to their college fund since. We've generally had them contribute a percentage of long term goal monies to important purchases. As teens they paid the differential between clothes needed and the importantl brand they desired.

**kork13** · 07-22-2013, 07:32 PM

I don't have kids yet, but when I do, I definitely plan to make learning how to smartly manage and use money a distinct priority as they grow up.

This is from a WSJ article I ran into a couple years ago, but I really liked it, so i've kept it. As a baseline, not a bad set of ideas to start with IMO.

**moneybags** · 07-23-2013, 03:49 AM

I gave my kids a monthly allowance ($25-$50/month depending on age). It got direct deposited into an online savings account. From there, we had a system of getting cash from us that would be deducted from their account. I did not require chores to earn the money, and I did not require x% to be saved. Both kids learned that they like to have money in their accounts. We let them make purchases as they wanted. We also made sure to point out the value or lack of value in their purchases.

DD is now in college. She manages her own money and does a great job. She is in charge of earning her own spending money. She only works in the summer. After her first year, she came home with a lot of money left in the bank.

I think the key is that I make wise financial choices and have explained them to the kids all along. Buy things on sale, don't get caught up in name brands, delayed gratification, etc. When the ice cream truck came around, I would give them a choice - get an ice cream bar now or we can get a box of them at the grocery store for the same cost.

**Tonyall** · 07-24-2013, 05:36 AM

I think by far the most important thing is to set an example. Children of frugal parents are simply much more likely to be frugal themselves.

After that, put them in charge of their money from a young age. My parents put me on a type of allowance in which I was responsible to buy all my own clothes. school supplies etc. I think that really taught me a lot about money.

**jillh2001** · 09-12-2013, 01:14 PM

Teaching Kids about Money

As a self-employed person, I take my kids to the bank with me. They add the columns up before I insert the checks. I tell them which check was for which day and the amount. They enter the numbers into the ATM and insert the envelope. Then I talk about what might have been tough about earning that particular check ( the client didn't pay on time, someone was not polite, or the client was really helpful and nice.) I tell them how much I like being an entrepreneur because I have flexibility.
Every month when it is time to send money to the college funds, I show one of them the amounts being debited from my account. My kids know that it takes 750K to educate two kids in a private IVY league college. That is the goal. Recently, my 9 year old overheard an adult talking about the high cost of college. She started to say, well my parents need to save 750K or 375K each. They are working on it. I know it because she does it all the time.
I also show the kids money in other accounts and talk to them about stocks. What is in their account, why I bought it, what I am going to buy next, what are the risks. This gives them the sense that they are part of the family decisions.

I talk to them about taxes. Why self-employed people make more money and often pay more in taxes. They still can't understand why it's fair that some people pay 50% and others pay nothing. But that's the cost of working in America. Opportunity is expensive.
We are very interested in teaching our children to be self-reliant and entrepreneurial. A large part of that is being frugal and making good decisions. We buy based on quality. We buy based on values. And we spend slowly and carefully.
This year we went on a two week vacation. The home we rented was very small. This was a great talking point to discuss trade-offs. The beachfront location versus the larger house. Two weeks in a smaller place or one in a larger one. Life is trade offs. Being in synch with why you do what you do is the key for us.

Teaching Kids to Save Money