Financial, Investment and Estate Planning Blog
Finances and Estate Planning are 2 critical life areas you can't leave to chance. In this blog, I will share various articles, tips and advice to help you navigate these areas. But a personalized 1 on 1 chat will always trump reading a blog. Call me today!
3 Ways to Raise Money Savvy Kids
Imagine if you gave your kids their inheritance tomorrow. How quickly would they spend it all? For most children and teens, once they get their hands on cash, they can't wait to spend it. If they aren't taught the power of budgeting and delayed gratification now, not much is likely to change in adulthood. How valuable can a job, nest egg, or inheritance be to an adult who never learned how to manage their money?
Using tangible lessons built on tried-and-true processes, you can teach them to be patient spenders early on and adopt sound money management skills. Here are three learning opportunities that work well together:
Start an allowance.
A weekly allowance for chores around the house is a must! People are more prone to safeguard money they've worked for rather than money they've been given. Allowances encourage budgeting and good saving habits. Give them opportunities to earn more money for doing extra work to instill the concept that working harder usually pays more.
Implement the 'three jars' system.
This system is great for tangibly illustrating the concepts of saving, spending, and giving for younger kids, but it can also be done using smartphone apps (such as Rooster) for older ones. Label three jars or accounts: save, spend, and share. Have kids decide what portion of their allowances or paychecks goes into each. The money put into 'save' can be invested, or held longer-term for larger toys or events. The money in 'spend' goes toward discretionary spending. And the money in 'share' goes toward a charity of their choice. If the charity allows it, make your donation while volunteering for an extra meaningful experience!
Open a savings account with a debit card.
Research banks to educate your kids about interest rates and how compound interest impacts a balance over time. Go with them to open their first savings account and ask about issuing them a debit card. Show them how their savings can grow, and how debit card purchases can impact their balances.
Using tangible lessons built on tried-and-true processes, you can teach them to be patient spenders early on and adopt sound money management skills. Here are three learning opportunities that work well together:
Start an allowance.
A weekly allowance for chores around the house is a must! People are more prone to safeguard money they've worked for rather than money they've been given. Allowances encourage budgeting and good saving habits. Give them opportunities to earn more money for doing extra work to instill the concept that working harder usually pays more.
Implement the 'three jars' system.
This system is great for tangibly illustrating the concepts of saving, spending, and giving for younger kids, but it can also be done using smartphone apps (such as Rooster) for older ones. Label three jars or accounts: save, spend, and share. Have kids decide what portion of their allowances or paychecks goes into each. The money put into 'save' can be invested, or held longer-term for larger toys or events. The money in 'spend' goes toward discretionary spending. And the money in 'share' goes toward a charity of their choice. If the charity allows it, make your donation while volunteering for an extra meaningful experience!
Open a savings account with a debit card.
Research banks to educate your kids about interest rates and how compound interest impacts a balance over time. Go with them to open their first savings account and ask about issuing them a debit card. Show them how their savings can grow, and how debit card purchases can impact their balances.
If you instill habits like these at a young age, they'll become second nature for your kids as they mature into adults. Try these three, and let us know how they go! Visit our website for more money management resources.
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