Kids learning to save and spend

Last updated 12:00 01/04/2014
Piggybank piggy bank
GOOD PIGGY: Saving smartly is more than just not spending.

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Have you ever wondered if your children will be better with money than you?

We have three children, eleven years of age and under, and all seem likely to do better than us at the same age. They enjoy the traditional way of managing savings and spending by using their wallets and piggy banks.

Our childrens' income is earned by completing chores around the house. They know that it helps the family manage the day-to-day things, and we think it is important to encourage a strong work ethic.

Each of our sons is paid their dues on a weekly basis. If we are overdue with our payment to them, then they can expect penalty interest for every day we are late; we're wanting to model paying off debt as soon as possible (and yes, it is also an incentive for us to try and remember our responsibility).

They decided to split their pocket money 50/50 between savings and spending.

Their savings goes straight into their piggy banks and their spending money goes into their wallets. Whenever we go off to the shops, they just take their wallets with them to make purchases. However, it is very rare that they buy anything at all, as our children are not huge consumers. If they do want something, they will often check out different types of shops first (usually second-hand stores/flea markets/sales/discounts), then wait a few days, and if they're still interested in purchasing the item, then we help them return to buy it.

Each can remember a time of missing out, where either the bargain item had already gone, or they paid more than they needed to. This often generates a worthwhile discussion on decision-making, 'Would it have been better to buy it first time round?' or 'Was it worth it?'

We hope our boys learn from their mistakes and make this a part of the process for understanding how to make money work for them, not just accumulate. And in turn, gain an understanding that saving is more than just not spending. To save for a purpose, deliberate decision-making is essential. As it happens, good friends from Canada recently stayed with us after travelling throughout New Zealand and Australia. Talk of their wonderful travels has left us all with the desire to save enough money and visit them in a few years.

The boys have also decided on a maximum amount they want their wallet to hold. When it reaches this amount, the surplus is added to their piggy bank. They chart their savings on paper or their whiteboard. My three would love to use an app like Savings Spree but they don't have an iPad/iPhone. Each of them gets a kick out of counting their money, making the transfers (between wallet, piggy bank, bank) and recording their savings balance on their boards/paper.

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The principle of surplus is also applied to their savings growth in their piggy banks each month. Once the amount reaches a certain goal (for one of our kids it is $70), they then deposit it into their bank account or decide on another way to invest it.

We know times change, kids change, and flexibility is important down the line, but this seems to be the best way for our kids to form better saving habits than we had. 

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