Teaching kids to save – and spend – money wisely

It’s the time of year where we adults are taking a closer look at finances — tax season! Perhaps we are looking back on the year past and considering what we could have done differently, where we can make changes for the better in this coming year. Maybe we are facing forward with enthusiasm about what lies ahead. With money on our minds, what better time than now to talk about it with our kids?

As a mom, I want my kids to be happy, to have everything they need AND want! I love to share what I have with them, whether in the form of an “allowance” or simply gifting them with money and things. But I also want them to learn that not everything they want comes through me, to make choices about how money is spent, and to learn the value of a dollar. In light of this, we use a system, of setting aside a certain amount to allocate to their “accounts” every week, with a certain percentage going into the following categories:

Spend: A small amount is set aside for instant-gratification items they may want, like a snack or small toy
Save: More is put away for larger items they would like, such as instruments, art sets, or gaming systems
Invest: The largest amount is set aside for their savings account, and later put into CDs for future use

Donate: Approximately 10% of what we have gets set aside for those in need.

Sure, I still buy them things on special occasions and also “just because.” However, being able to decide whether to buy themselves the candy bar today or to save it for tomorrow empowers them to take responsibility for how and where money goes, and to put it toward the things they really want. It helps them learn how to prioritize their “wish lists” instead of wanting everything in the store, and to understand why sometimes the answer is “yes” and sometimes the answer is “maybe later”. Together we decide how much of their “birthday money” goes into which category, as well as any they have earned. My kids love brainstorming ideas (see photo) for what to put it toward! Take the donation category, for example. Every year they enjoy going to the store and buying something to contribute to Toys for Tots, with their own money.

You can find “piggy banks” that already have these preexisting categories, or simply create your own banks out of jars or little boxes. Make a project out of it — get creative!  Each family’s needs are different, and you can create your own system based on these suggestions and ideas. The important thing is to teach and communicate, empower and have fun!

What ways do you use to teach your kids the value of a dollar? Share with us your stories — in the comments below, or on Facebook!

Michelle Mersy, C.P.C. is the mother of two wonderful children (one who likes to *spend*, and one who likes to *save*), and a certified Life and Parenting Coach. She affirms, “Stop just wishing things could be different. They can be, if YOU do something different. Coaching will make that difference.”

989-397-8386 ~ Michelle@MichelleMersy.com