A friend with small children recently asked me when should parents start teaching kids about the value of money and the importance of always have some savings. It's almost never too soon!
Start early. At about 5 or 6 years old, you can start giving kids a weekly allowance. Set them up with a piggy bank into which they should deposit half their allowance, and let them do what they want with the rest (spend, or better yet, save). But if they want to buy a specific item, help them set a savings goal and timeframe so they know how long it will take to save up.
Open a savings account under their name. And make sure they contribute to it on a regular basis, even small amounts (such as money from birthday or holiday gifts). It will help them become familiar with banking and will start them on the road to achieving their financial goals.
Make sure they always save a percentage of their earnings. This is a crucial lesson when kids start earing money on their own, whether you're paying them for extra tasks around the house (like helping powerwash the siding or painting a room) or they get a job outside the home (even if that means odd jobs around the neighborhood). Always make sure that they save half of these earnings,
Don't let them spend all of their savings. Kids should know that you should avoid spending all of your money. If they want to buy an item for $50 and they've saved up exactly $50, remind them that they're still not really ready to make the purchase. They need to have a cushion of funds leftover before they can buy it.
Actions speak louder than words. Be a role model and always set a good example__.__ If you want your kids to save, set your own financial goals and stick to them! You should also get your children involved in setting money goals for the whole family, and talk openly and regularly about the progress you've made towards that goal.
Yamila Constantino is a pioneer of financial education for Latinos. She is a member of the National Financial Educators Council Advisory Board and a winner of the US Hispanic Chamber of Commerce At the Table award for women entrepreneurs.
The information in this article was obtained from various sources not associated with State Farm. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. These suggestions are not a complete list of every loss control measure. The information is not intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. Nor is it intended to effect coverage under our policy. State Farm makes no guarantees of results from use of this information.
