1) As soon as children can count, introduce them to money. Take an active role because repetition and observing others are the two methods they learn by.

2) Communicate with children, as they grow, about your values concerning money and how to save it, make it grow, and most importantly how to spend it wisely.

3) Helping children also learn the difference between needs, wants and wishes. This will prepare them for making good spending decisions in the future.

4) Setting goals is a fundamental concept to help young people learn the value of money and also how to save. People, young or old, rarely hit targets they don’t have. Nearly every toy or other item children ask their parents to get for them can become the object of a goal setting session. A benefit of saving to achieve the goal is an important aspect and provides built-in motivation. Goal setting for good grades, toys or savings, helps children learn to become responsible for their own futures.

5) Indoctrinate your children to accumulation (or savings) instead of spending ( or consumption). Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money saved at home. Have children help calculate the interest so they can learn and see how fast money accumulates through the magic power of compound interest.

Later on, they will also realize that the quickest way to a good credit rating is a history of regular successful savings. Some parents offer to match what children save on their own. “It is a time tested way to get them started,” says Kiplinger’s Personal Finance Magazine. I read of one couple who had their children pay one-half the cost of all their playthings over the years. They handed it back to them with interest at their children’s college graduation. It averaged over $2,000.

6) When giving children an allowance or income, give the money in denominations that encourages saving. For example if the amount is $5, give out five $1 bills and encourage at least one be set aside in savings. (Just saving $5 a-week at six percent interest compounded quarterly will total about $266 in a-year, $1,503 in five years and $3,527 in ten years.)

7) Introduce U. S. Savings Bonds to children. Take them to the bank when you make the purchase. Bonds are still a good value, cost one half the face value, earn interest and in some instances, will be tax-free if. used for a college education. Perhaps more importantly, when given as a gift, they will not be immediately spent – and this will reinforce savings and goal setting lessons.

8) Take the youngsters with you to a credit union (or a bank) when you open their savings accounts. Beginning the regular savings habit early is one of the keys to savings success. Don’t refuse them when they want to withdraw from savings for a purchase or you’ll risk discouraging savings all together.

9) Keeping good records of money saved, invested or spent is another primary skill young people must learn. To make it easy, use 12 #10 size envelopes, one for each month and a larger envelope for the year. Establish this system for each child. Encourage children to keep receipts from all of purchases and then make notes.

To learn more about budgeting, credit and personal finance, be sure to tune in http://cbsloc.al/ListenWAOK to “Financial Solutions with Rob Wilson” every Saturday from noon until 3pm.


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