Raising Kids Who Save
Once a child understands that the products you buy have a monetary value, take the next step. Give your child an allowance. And show him its value by encouraging choices about how to spend the money -- or save it.
Kids should get a regular allowance, says Steve Pomerantz, a certified financial planner based in Boca Raton, Florida and host of National Public Radio's "On The Money Radio." You can start when they're old enough to understand that items cost money -- around 4 or 5 years old.
Pomerantz says the amount should be age-appropriate -- enough for small short-term needs such as after-school candy, pizza or a movie, but not enough for more expensive purchases like a new electronic gadget. Giving smaller amounts encourages kids to save for the big-ticket items.
The amount of allowance is different for every family, depending on your income level and how much you can afford to give your child. Some experts suggest tying an allowance to household chores; others say managing an allowance is its own task that should not be confused with the completion of household duties.Some Suggestions:
- Ages 5 and 6: $5 a week
- Ages 7 through 9: $8-10 a week
- Ages 10 through 12: $10-12 a week
When you start giving an allowance, you have to start watching what goodies you buy for your child. If you usually buy whatever your child requests when you're on line at the grocery checkout counter, change your ways. Tell your child he can buy those items himself. Or, if it's an item you disapprove of, you can set rules about how he can spend his allowance.