Setting up a Saving habit.
I think it's really important for kids to learn about money.
The value of it, the patience of having to earn it and the absolute unbridled joy of being able to afford something you have been saving for! So we are starting small and setting up a saving habit for Lucas, which I hope will continue into adulthood.
A little bit of history about me before we begin. When I started my first full time job they said we could split our pay into different accounts. I was lucky enough to be still living at home, with only minimal overheads, so I had half my pay put into a saving account, and I lived off the other half. I had never had money like this before .... so half of a pay packet was like a fortune to me! I didn't even miss the other half. A year later that other half of my pay, that I had almost forgotten about, took me to Europe.
My point here is that it's easier to have a successful savings habit when saving is something you don't even think about. It's harder to choose to give up half of your money every week - every week - to say, I think I'll put half of this in a bank account and not buy the new shoes...argh! Who has that sort of willpower? If you have to make that decision every time then soon it becomes less and less that heads to the savings account. If it is a habit - a set amount every week - then you get used to it. (Well that's the plan!)
So that's the habit we are working towards this year.
I read somewhere that a kids pocket money should be equal to their age. I like this guide because it gives me a reason for selecting an amount. Lucas understood, No discussion needed. Done!
Lucas is 8 and so he gets $8 a week. Side note - yes he's that old! eeek!
Here is where the fun happens -
We collected three money boxes.
Two of them don't open - just cheap ones from the local $2 shop.
One money box does open - He loves the animals on the sides, and it has to be easy to open so he can count his riches.
I think this step is important. We are taking away the temptation to dip into the savings, and I'm allowing the spending money to be easily accessed.
We are teaching him to allocate his money - some for fun, some for later.
So over the holidays we collected and labeled the money boxes.
SAVINGS - SPENDING - CHARITY
They ended up being LUCAS SPENDING - LUCAS SAVING - LUCAS CHARITY.
More labels = more fun.
When the label machine is out we had a bit of a play with creating some other labels too .... because labels are FUN no matter how old you are!
Three tins and $8 a week. How will that work?
We decided ( yes Lucas was involved in the decision ) so WE decided that ...
$3 goes to Spending
$3 goes into Savings
$2 goes into Charity.
Now lets get serious for a second - this kid does not need pocket money so anything is a bonus. We could have chosen to allocate $3 to charity - $3 saving and $2 spending, but I really don't think it matters what the split is. Remember, it's about having a set amount each time he gets his pocket money. (money comes in - money goes out!)
So he now doesn't think about it - he know that every time he gets his pocket money has puts 3 - 3 - 2. If it was 6 - 1 - 1 it would create that habit of setting aside money for later and some for charity, but we wanted it to be a fairly even split.
The great thing about having the money boxes is that Lucas loves putting the money in the different tins and he is involved in the decision. If we put $3 in his hand and $5 in an account then he's not involved and the habit is not his - it is ours
Now we just need to put a reminder in the phone to make sure we give him the pocket money every week. I'm sure if we forget he will remember!
Do you give pocket money to your kids?
- Helle Warming