How I got my kid to save money
When I look back on my life, I think back about all the money I have earned and all the money I have wasted. What life would have been like if I had saved the majority of my money from my first jobs, from birthday presents…etc.
I read the Warren Buffet book — The Snowball — and the book clearly illustrates what happens when you save a penny and then the penny becomes two…etc. I think Mr. Buffet is probably a pretty good example of what happens when someone becomes fiscally prudent. Of course he is a great investor, but if you read the book, he couldn’t have made his first investment had he not diligently saved.
As a parent, you want to know how to teach your kid to save money. I have heard experts suggest that parents give their children a dollar per week for each grade they are in; so a 1st grader gets $1 per week…etc.
We have implemented this with our child. However, we have taken it further. One week of the month, the money is deposited into his savings account. He has to sit down and reconcile his bank book each week and he cannot use this money. On the other weeks of the month, he gets cash…half to be saved and the other half to spend freely. All transaction need to be tracked. Once the cash savings gets to $30 he goes with me to deposit it to his savings account.
I am not sure this is the best method and I know it’s not the only method parents use, but the other weekend I was impressed when my son wanted to buy a new Lego set. He had $20 he could spend. At the store he chose two sets that would have used almost all of the money. Once we sat down and I explained to him that he could do this, but he would not have any spending money for quite some time, he put one set down and left with half his money. Success!