Teaching Kids Money Management (under age 10)

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wingnutty
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Teaching Kids Money Management (under age 10)

Post by wingnutty » Sun Mar 23, 2014 8:09 pm

My wife and I have 4 kids (twin 1 babies, 4 yo and 6 yo). I'd like to start teaching our older daughters responsible money management. This is something I'd like to work on throughout childhood, teen years, etc. I have some ideas, but i would like to hear from others what has worked for them? I am sure there are some great ideas out there.

I can't say my parents ever did anything specific, other than just being good parents, but my sister and I are both responsible with money (my younger brother is a tad different, I suppose).

Some ideas I have include giving them 2 or 3 different piggy banks (decorated glass jars) for saving. 1 jar for spending and saving for 'wants', another jar for saving (long term saving). When they get money they can put it in either jar, but for all the money that goes in the saving jar, I will add 25% to the total in the jar at the end of the year or every 6 months, or something. This is a tad advanced for them at their current ages maybe, but it is something we can try and start doing, maybe? The savings jar will eventually be for some big future expense (college, car, I dunno?)....Basically I want to teach them the value of saving and that by saving you can use your saved money to make money.

What are some thoughts and ideas?

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Will do good
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Re: Teaching Kids Money Management (under age 10)

Post by Will do good » Sun Mar 23, 2014 8:39 pm

When our kids were young (8-10 years old?), we gave them $3 per week. $1 goes to tax, $1 to savings and $1 for whatever they wanted to spend it on. When they got older it's was $6 per week. Than they got jobs. The saving rate was even better than when they were little kids.

We wanted them to learn about saving early and the tax man is alway there. Today they are savers with a good job, healthy 401K and investment accounts and no debts :D

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wingnutty
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Re: Teaching Kids Money Management (under age 10)

Post by wingnutty » Sun Mar 23, 2014 8:49 pm

Will do good wrote:When our kids were young (8-10 years old?), we gave them $3 per week. $1 goes to tax, $1 to savings and $1 for whatever they wanted to spend it on. When they got older it's was $6 per week. Than they got jobs. The saving rate was even better than when they were little kids.

We wanted them to learn about saving early and the tax man is alway there. Today they are savers with a good job, healthy 401K and investment accounts and no debts :D

TAX?! :D haha! You guys were the real deal :sharebeer

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Re: Teaching Kids Money Management (under age 10)

Post by Fallible » Sun Mar 23, 2014 8:52 pm

This may not be exactly what you're looking for, but Allan Roth's book about his son, How a Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn, is a great read.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

sls239
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Re: Teaching Kids Money Management (under age 10)

Post by sls239 » Mon Mar 24, 2014 3:31 pm

We only do long-term saving with our son - age 7. And I'm careful to not suggest that it is allocated for anything like a car or college either. I believe in saving for the sake of saving, or rainy day, or whatever you want to call it.

I don't do the short-term "saving" for wants because I think it can encourage them to want and to focus on their next purchase. I'm just trying to protect him from consumer culture as much as I can as long as I can. He hardly ever asks us to buy him anything, and I think that is the reason. When we go shopping for him, I set the boundaries and he chooses from within the boundaries.

That said, he's still learning about money. At the book fair he learned that you can get two paperbacks for the price of one hardcover, and I let him know that the hardcover book would come out in paperback in a few months if he was willing to wait. So he's learning to make decisions, just not within the arbitrary boundary of a weekly allowance, but a meaningful boundary in the context of what is best for our family.

I think there's plenty of time for kids to learn real budgeting later, after they've gotten their heads around delayed gratification.
Last edited by sls239 on Mon Mar 24, 2014 3:34 pm, edited 1 time in total.

livesoft
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Re: Teaching Kids Money Management (under age 10)

Post by livesoft » Mon Mar 24, 2014 3:33 pm

Give them allowances when you feel they can start buying things on their own.

Give them an ATM card with associated checking account at around age 13 to 15 and certainly when they get a job.

Teach them how to buy things online safely and how to buy in stores, too. Show them how to return items as well.
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sport
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Re: Teaching Kids Money Management (under age 10)

Post by sport » Mon Mar 24, 2014 3:54 pm

When we took our children shopping for school clothes, we usually did it during end of the season sales. I showed them the price tags marked 50% off the original price. I explained that in season, we could buy one item for this amount, but during the sale, we could get two of them for the same money. Even at age 8 or 9, this was easy to understand.

We also opened a mutual fund account for them. I showed them the quarterly statements, and gave them the semiannual reports. I explained the reports to them, and told them that they were actually owners of a small piece of each of those companies. They also got used to the idea that sometimes the value went up and sometime the value went down. They also got used to the idea that buy and hold was the thing to do, not try to buy and sell in an attempt to time the market.

By doing these things, they have become savvy shoppers and the idea of saving and "buy and hold" investing seems normal to them. They are now adults, and have good money management habits.

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Re: Teaching Kids Money Management (under age 10)

Post by Mountain Man » Tue Mar 25, 2014 8:53 am

wingnutty wrote: other than just being good parents
Is there anything else needed that I didn't just quote? Probably not too much. Being good parents and modeling the behavior you want is probably the most important thing you can do. If you save money and talk about why it is important, then your kids will probably follow suit. A few things we also do are give them a weekly allowance (currently $1) (we have a 8, 6 and 2 year old) with no strings attached. I am sure the amount will increase over time, but the idea is the same: If they want to save it they can, if they want to buy some football cards or a candy bar, fine, go splurge. Its a way for them to figure out how to use money. We also have started a custodial brokerage account for each of them at Wells Fargo with a coupe hundred bucks in it (we got in when they were giving out 100 free trades a year and our now grandfathered in) where they can buy individual stocks. They get control of this account at 18. It has been fun to talk them through dividends, capital gains, about different businesses and how businesses make money. I like them owning individual companies for now because it seems more tangible to them. We go places and they are like, hey, I own some of that company. The main thing is just to get them interested and to model good money habits and to talk openly about finances.

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Re: Teaching Kids Money Management (under age 10)

Post by bengal22 » Tue Mar 25, 2014 9:11 am

I think that under age 10 if you can get your children to do chores and take responsibility that they will be a leg up on their peers. Instilling a decent work ethic and having strong values will go more toward earning potential, which in my book is the biggest factor in financial success. If they have these values the money management will come later.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

RobertAlanK
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Re: Teaching Kids Money Management (under age 10)

Post by RobertAlanK » Tue Mar 25, 2014 9:24 am

wingnutty wrote: Some ideas I have include giving them 2 or 3 different piggy banks (decorated glass jars) for saving. 1 jar for spending and saving for 'wants', another jar for saving (long term saving). When they get money they can put it in either jar, but for all the money that goes in the saving jar, I will add 25% to the total in the jar at the end of the year or every 6 months, or something. This is a tad advanced for them at their current ages maybe, but it is something we can try and start doing, maybe? The savings jar will eventually be for some big future expense (college, car, I dunno?)....Basically I want to teach them the value of saving and that by saving you can use your saved money to make money.

What are some thoughts and ideas?
We also initiated the separate piggy bank model for our daughter when she started getting an allowance at age 6. We use three of them, for spending, saving and giving to others. Right now she gets $6 each week and divides it evenly among the three buckets.

One year into this, my biggest surprise has been how little she cares about her money. I may need to be more intentional about developing her understanding of the care and uses of it.

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Re: Teaching Kids Money Management (under age 10)

Post by Confused » Tue Mar 25, 2014 1:00 pm

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Polaris
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Re: Teaching Kids Money Management (under age 10)

Post by Polaris » Tue Mar 25, 2014 2:30 pm

We don't give our kids an allowance, but I did buy paper I bonds with the cash they got for gifts when they were little. I periodically review the balances with them and they like to see their modest savings grow. A couple of years ago we opened a Capital One 360 bank account for kids for them and they think it's cool to have their own ATM card. They put put most of their birthday and Christmas cash in there and hoard it like Ebeneezer Scrooge, although they do periodically dip into it for things they want (mostly cables, online video game purchases, etc.).

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