By Michael Rupured
University of Georgia

American children get almost $15 billion a year in allowances,
gifts and wages. How they spend or save that money depends on
what they’ve been taught.

Financial management is seldom taught in schools, so the job lies
in the hands of parents. And when it comes to money, children
often learn more from what parents do than what they say.

The first step is to be a good example. Save regularly, shop
wisely and plan spending to meet family goals. When children shop
with you, encourage them to help you compare similar products.
Talk about which one is the best buy for your family and why.

When to start

By age 3, children are old enough to notice that the shiny coins
that so fascinate them can be swapped for things they want and
need.

As young as age 6, children can be taught to save. Before they
leave the nest, teach them how to save, spend and borrow wisely.
Teach them how to budget, use bank accounts, buy insurance and
invest for retirement.

No matter what age, help your child develop a savings habit. Most
adults are either spenders or savers, and savers are far less
likely to have money problems than spenders. Matching your
child’s saving with your own contribution is a good way to
encourage the savings habit.

Incentive to save

For example, if your daughter wants a new doll, post a picture of
the doll in her room along with the price. Attach an envelope for
the money she saves. For every dollar she saves, you add 50 cents
or some other amount you can comfortably afford. When there’s
enough money in the envelope, then allow her to buy the doll.

This example is based on the assumption that your child gets an
allowance. An allowance lets children share in the family’s
financial resources and teaches money management skills.

Teach your child to save at least 10 percent of her allowance.
The earlier saving becomes a habit, the easier it is to stick to
it as an adult.

A key

Help your child develop a simple plan for spending. Start with a
goal, something your child wants to do or buy. Determine the
dollar amount of the goal and the time required to reach it.

It’s best to start beginners and young children with a goal they
can easily reach in a few weeks or a month. Be sure to include in
the spending plan other expenses the allowance should cover.

Next, open a savings account in your child’s name. Talk with your
child about how interest accumulates and what happens if money is
withdrawn.

Not just the kids

Make saving a family project. Set a goal for something the whole
family will enjoy, like a family trip.

To reach your goal faster, choose one thing you spend money on
every week that you could do without. Tell the family what you’ll
give up and how much you’ll save every week.

Ask each family member to set their own savings goal for the
trip. Help them to look for a weekly expense they can eliminate
to help meet the family goal.

Starting early to teach your children to become good money
managers can prevent you from having to bail them out of a
financial mess later in life.

(Michael Rupured is an Extension Service financial management
specialist with the University of Georgia College of Family and
Consumer Sciences.)