Thursday, March 6, 2008

Teaching kids about saving

One of my main goals as a parent is to teach my kids about money. I want them to know the value of saving and the dangers of debt. I’m not 100% sure what is the best way to go about this though. This is what I’m doing so far…

I have a six year old and for the past two years or so she has been getting an allowance. But I don’t just hand over money. She has five chores she has to do and when she has done them each five times she gets five dollars. The goal was for it to work out to be about $20 a month, although in reality it is much less than that. We have a chart on the fridge and every time she does one of her chores she gets a magnet next to that particular chore. Then when she has done each one five times, she gets her money and we start over. It is up to her how hard she works and therefore how much money she makes.

When she would point something out at the store that she wanted that is more than $5.00 (which is pretty much everything) I would explain that she would have to save her allowance up in order to buy it. I would tell her how many times she would have to do her chores to be able to afford it. Hearing that she had to do her chores every day for six weeks just to buy a Polly Pocket Dress-Up Set was very overwhelming and she never once did it, or even thought about it, so I was feeling like this wasn’t really working. But I will have to say that it’s a great guilt reliever on the “not-buying-your-kids-stuff” issue. I can say “You can buy it with your allowance” and just move on, knowing that if she really wants it then she can buy it herself.

We had a trip planned to go to Disneyland last December. We had been planning it for about a year and my daughter was very excited. One day in June she wanted to know how many weeks it was until we left for Disneyland. I counted it out and there were20 weeks left. I said to her, “You know, if you do your chores everyday until we leave for Disneyland you will have saved up $100”. Think back to being a kid. Do you remember how much $100 was when you were five? I remember it was pretty much the most money a person could ever have. It was pretty motivating to her. She loved that idea. So for the next six months she did her chores almost every day. I had purposely worked in free weekends because I wanted her to be successful and give her a little wiggle room. This was already a lofty goal.

We got an envelope and taped picture of Cinderella’s castle to the front. She kept it in a special spot in her room. We would put the money in there and every time we added another $5.00 we would count to see how much she had. She loved it! She stayed motivated for the whole six months and she saved up a grand total of $76. Which isn’t the full $100 she was aiming for, but it’s still great.

Now when she sees something at the store she wants she tells me she is going to save up for it. Saving $30 seems like a very attainable goal after working so hard and saving over $70. But I have to say, she hasn’t actually saved up for anything yet. She usually forgets about whatever she saw by the time we are in the next aisle.

Well, that is what I have done so far on my quest to teach my kids to be responsible with money. If you have any ideas that worked for you and your kids please let me know!

*picture by Lemoncat


JB said...

I have a 5-year old step-daughter that I'm trying to do the exact same thing with. We are also planning a trip to disney world probably in a year! But - I'd be very interested to know what chores you have her do.

MasterYourCard said...

Great post! I think teaching kids about frugality is one of the most important lessons a parent can impart.

What did your daughter spend her hard-earned money on?

R said...

Interesting post!
I too am thinking of starting my 4yr old on 'paid'chores but am quite skeptical about whether he will associate everything he does with the $$ instead of it being his duty, as a part of the family, to help out with the household chores.