How can you make a positive impact on your kids’ future financial decisions? If your child receives an allowance or has another source of income and isn’t sure what to do with the money, help your child balance their options: spending, saving, or giving to charity.
- Saving: Putting away a certain amount of money each time your child has the means ensures that he or she can pay for something they really want. Pen Air customer Raelyn, 6, says she’s saving for a trip to Disney World. “I can put [the money] in my hedgehog [bank] or I can deposit it in my account,” she says. If your child wants to save for something special, encourage him or her to put a portion of their weekly allowance, or any money received as gifts, into a jar or piggy bank, or open a savings account together at your credit union and deposit the money there. Make it a special occasion!
- Spending: If your child decides to spend the money, let him or her decide what to spend it on — within limits, of course. Take your child to the store and look at the pros and cons of each option together. If your child wants to save for a special toy but is prone to impulse spending (who can resist the penny candy?), share your own saving techniques — such as putting a picture of the toy on the savings jar as a reminder not to spend it.
- Giving: Encourage your child to give back to the community. Help your child to find a charity that supports a cause he or she is curious about (perhaps animal welfare or hungry children). Start by learning more about the charity together – check the organization’s website or attend a local event, and allow your child to ask questions along the way. From there you’ll be able to help them identify ways to help, either by donating their time or setting aside money to give to the cause.
Finally, remember to set an example. If you have saved up for a special purchase, tell your child about it. If you give to a charity, explain why. By helping your child to understand the impact of your decisions, you model behaviors that will inspire them to make better decisions when managing their own finances.