Let Them Earn Extra Spending Money (above an allowance)
A set allowance each week or each month will get kids used to managing money regularly, and they can start to plan what they’ll do with it, which is excellent practice for when they’re older and have bills to pay. But if you base their allowance allotment on basic chores that they have to complete around the house, consider giving them the opportunity to earn more money if they take on extra duties. Teaching them that they can increase their earnings by taking some initiative is a great lesson in and of itself.
Make Savings a Habit That Starts Now
Between the allowance, extra spending money, and any gifts they get, even kids should be able to set aside some money for savings. Establish a policy that a few cents of every dollar they make need to go into a savings account for college. If they have medium-term savings goals, like socking away $50 to buy a more expensive toy, you can help them plan for that too. But it’s essential that they begin thinking about long-term savings early. When it’s automatic to save a portion of every windfall for the future, they’re setting themselves up for success.
Teach Them about Charity from the Get-Go
Helping others is a great value to instill in your kids as soon as they can understand that there are others in need. Talk to them about causes that are important to them, and help them pick some charities that they’d like to contribute to with a part of the money they make from allowances and gifts. This method is a great way to get them thinking of helping people, while also budgeting their money.
Give Them Responsibility for Their Own Money
So you’ve encouraged them to save, both for long-term and short term goals, plus giving to charity, and now they have what’s left over. The best lesson you can teach them now is that their money is their own! That means taking a step back and letting them spend it on what they want to—even if it seems frivolous or impractical to you. We’re not encouraging you to let them blow all of their college savings, but if they want to spend the remainder of their allowance on video games and the latest fad gadgets, that’s for them to decide. If they come to you a few days later asking for an advance on their allowance so they can go to the movies with a friend, the answer should be no—those negative lessons help them learn just as much as the positive ones.
Great financial habits start at RMCU, where you can get your kids started with their first savings account. Sign them up today, and set them on the path to a bright financial future.
