Grade School Thrift Lessons
The earlier you start teaching children money lessons, the better. Starting an allowance as soon as children can understand delayed gratification and planning, and then adding on a savings account, is a great way to start.
Try to mirror your children's money lessons to adult financial realities as closely as you can. Make allowances consistent, like your paycheck. Avoid linking them to the household chores that the kids are responsible for. (After all, chores are an everyday reality of sharing family responsibilities.) It's helpful to pay the allowance in increments that are easily divisible. Try 25 cents or $1 per year of age, to start. And work with your child to decide how to invest, save, and spend the money. You could also consider a base allowance with an extra 10 percent bonus if certain incentive milestones are met, such as scoring good grades or completing special home projects.
Allowances are more effective when they're received consistently. Don't let the rush of the day interfere with getting the allowances paid. Remember, this is your child's payday. Setting up a direct deposit from your account to her account — when she gets one — is a good way to be sure these payments aren't missed.
Get your kids involved in shopping and comparing prices. Have them create savings plans for larger-ticket items that they want to buy, rather than you picking up the tab. If you need to, help them reach their goal more quickly by matching their savings deposits.
