5 Financial Tips for Kids
A lot of parents forget to explain to their kids what they’re supposed to do with money once it’s earned. “When you’re a child, and you’re given a lump sum of money, if no one teaches you what to do with it, you’ll grow up thinking it’s all meant to be spent,” says Godfrey.
Best Approach: Children as young as three can start receiving an allowance, and with that allowance comes the idea of budgeting and saving. Godfrey suggests using four clear jars (the visual aspect is important for kids), and sitting down on allowance day with the jars to divvy up the money into 10% for charity, 30% for quick cash, 30% for savings to be used in the next couple of years and 30% for long-term savings.
“When you’re at the store, have your kid point out items that she wants,” says Godfrey. “For less expensive things, tell her that she can pay for those out of her “quick cash,” but for more expensive items–like a bike or a video game system–she’ll need to save up for them using her “long-term savings” jar.”