The average age to start giving kids an allowance is 8 and the average amount per month is $67. (source)
We all want our kids to grow up and be responsible stewards of the their money. No one wants to see their grown up children suffer because they are drowning in credit card debt or lose their house because they had no idea what living within their means meant.
But that is exactly what is happening in today’s economy- according to this article 12 million people in the US are spending over 50% of their income on housing. Where I live, in San Diego, most of us are not the exception to this statistic.
With this crazy economic market we all need to really be considering our futures and the future of our children- so what are some ways that we can help they to grow up respecting and understanding money?
Here are 4 tips to get your kids started on saving money (and at the end I will give you a tip that could easily help them save $5000 by the time they are 18).
- Allowances– Give your child an allowance and let them earn extra through doing extra chores beyond the ones they are already assigned. This is a great time to make up simple budget with them. Include on the budget things they are saving for, tithing and charity, money to go in the savings account, etc.
- Do as I say- not as I do– If you want your children to respect and value money- you need to value money. You shouldn’t simply buy everything you want all the time- even if you think you have the money for it. Let you children see you saving for a new TV or a vacation. Or let them be in the loop about your budget. For example: if you have a monthly clothing budget, tell them what it is and show them when it’s gone it’s gone. Don’t just spend without abandon.
- Tithing and Giving to Charity– I’ll be honest, I was pretty tight with my money as a kid (I am now, too) but teaching your children to give can be such a reward for them. If you go to church- ask your children to set aside a certain amount for God to use. Talk to them about God providing the money in the first place. If you would like for your children to give to charity maybe take them to the place their money will be going- be it a homeless shelter or a pet rescue, etc. – this way they are involved and see where the money going.
- Open a Savings Account– You can decide what your child might be saving for, be it college or a car or whatever else you deem appropriate for your family. But a savings account is a really great way to teach your child about banking and that their money makes interest while in the bank. They can learn to check their account online and how to use the ATM and eventually how to use a checking account, as they get older.
Kids won’t necessarily find all this very exciting (but to be honest neither do I all the time). I would love to be able to go out any buy my hearts desire at the drop of a hat. But that’s not life. Life is about learning self-control and responsibly. And it is good to learn that saving money can be fun and exciting, too. Because providing children with the means to ensure their own secure future is exciting.
But the though of saving $5000 just MIGHT excite them a little, here’s how.
If you start giving your child an allowance at the age of 8 (the average) and over the next 10 years there allowance averaged $67 a month (the average). All they need to do is save less than half of that money , $30 a month, in an account that earns around 5% interest. By the time they are 18 they will have deposited $3600 and earned the interest of $1087, coming out to $4708. (check out this compound interest calculator to see how I figured this out).
Now that is pretty awesome. And here is my guess. If you have taught them well and they love saving, they may even save more.
These are just a few tips on teaching your children about money and the rewards it can bring. Do you have any strategies that have worked in your family?
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