July 15, 2019
As a parent, you are granted the opportunity, and responsibility, of providing your children with many important and impactful life lessons. This includes the lessons revolving around personal finances. Start by building a firm foundation on the three fundamentals of personal finances, save for later, spend wisely and share with others. This three part mini series will touch base on each of the three fundamentals of personal finance with side notes on my own upbringing as an accountant and penny saver's daughter.
My parents were and still are great role models when it came to their personal finances. They saved, “paid themselves”, purchased with cash (sometimes) and gave back to the church or other organizations close to their hearts. Now, money wasn’t something we genuinely brought up during weeknight dinner conversations, but it was something we could talk about if needed. I remember my parents talking openly about needing money in this account or depositing a check into that account. It wasn’t a conversation topic that they made us feel needed to be done in hushed tones and behind close doors. Money is part of our everyday life, literally, so why wouldn’t it be a part of your family’s?
How to teach your children to spend wisely? This goes back to setting the example for your kids. It’s easier said than done, but it goes a long way. In the meantime, provide an allowance to your children on a regular basis. When your child wants something at the next grocery or general store run take the opportunity to introduce budgeting. If the item is greater than what they have saved, then encourage them to continue savings. If other spending distractions come up along the way talk with them about prioritizing and making good spending choices.
TIP: Set a goal with your kiddo on an item or experience that they have their heart set on. Let them save up to pay for a new toy, a fun movie or even a sweet treat that they have been wanting for a while. Compare what their allowance amount is to the value of the item and then figure out how long they will have to save in order to reach this goal. We all understand the struggles and the reward of saving up for something fun and then being able to enjoy it. Share these experiences with your kid as they navigate the spending and saving emotional roller-coaster.
As told by an accountant and a penny saver's daughter: When we started kindergarten, my parents began giving us an allowance each week. My father would give us a dollar a week. Please note that this was in the early 2000’s and not the 1900’s. This did however provide a massive incentive to help around the house for extra cash considering it would take eight weeks to save up to go to a movie. It started out with him handing us a one dollar bill each Friday and then it transformed into a direct deposit into our own accounts with the Bank of Dad. The Bank of Dad did not take inflation into account, but it did give a 10% interest rate each month. I didn’t realize how AMAZING this was until I was much older and saw the interest rates on my own savings accounts. He kept track of how much was deposited and withdrew with an excel spreadsheet, very official. Over the years we saw the numbers increase and decrease with various savings ways and spending sprees. I learned quickly just how fast my money would disappear when I splurged on the Otis Spunkmeyer Cookies at the elementary school Book Fair or when I went to multiple viewings of the Twilight movies in Middle School in one weekend. Through these spending splurges I realized the importance of saving for things I was looking forward to.