One of the easiest and most effective ways to give your child some much needed financial perspective is to have them make a savings goal. That common theme runs through each of this week’s family finance picks:
I love this simple allowance story in the Wall Street Journal. It has all of the perfect elements: delayed gratification, goal setting, responsibility, extra effort, mentorship, and ultimately achievement. There’s even a surprise bonus for patience at the end. Read 7-year-old Gavin’s story here.
Every kid should have this simple but invaluable experience. May the force of good money habits be with your kids — make a savings goal today!
Shannon Ryan, a Certified Financial Planner, writes about teaching kids how to manage money. Her posts are based on her own experiences with her two daughters. This recent post contains excellent tips for kids in the “tween” phase including these favorites of mine:
- The grocery store is a great place to have the wants/needs discussion.
- Make savings goals. When your kids have specific savings goals, they put miscellaneous wants in perspective: “Is buying that gum more important to you than saving for that lego set?”
- Put your kids in charge of simple, well-defined budgets (back-to-school, party, clothing) to gain essential financial decision making experience.
- Create job opportunities for your kids to earn extra funds.
Read the details and check out Shannon’s blog here.
Q: When should you start teaching kids about money?
A: When they’re old enough not to eat it.
That’s the suggestion of one expert consulted for this article. I like it. Start early!
The article provides a set of age-based goals to set with your child when it comes to learning how to handle money. It covers ages 6 (e.g., “learn to make change”) to 18 (“understand credit cards and other forms of debt”). Note that the first goal in the 11 to 13 range matches this week’s theme: set up a savings plan. Check out the complete list here.
It’s also interesting to compare the Family Education list with the age-based money milestones put together by the President’s Advisory Council on Financial Capability. You can find the latter on the Money As You Grow site here. I agree with the Money As You Grow folks: kids can learn to make savings goals well before their tweens. In fact, many are ready as early as age 3 (see Milestone #3).
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