or (with your guidance) on the Internet. Teach them to prioritize. Then help them create a special fund, which you can keep for them in an envelope, out of their reach.
You could also offer to match what they save with a contribution of your own, just as corporations sometimes match employees’ donations to retirement accounts. Your kids will be encouraged to save money instead of immediately spending it, and they will learn how saving money can help them achieve their goals.
If you instill these habits early, the dividends will pay off later. Start off [as] early as kindergarten by buying your child a piggy bank. Today such banks come in all shapes, sizes, and colors. Make the process of saving even more fun by purchasing a bank that appeals to your child’s particular interests. Ask your older kids what sort of financial goals, both short- and long-term, they would like to set for themselves. Have them write down where they see themselves in six months, a year, after college, and five years after that. Then analyze with them exactly how they can achieve these goals. Chances are, their goals will not be achievable by earning $8 an hour in an after-school job.
Kids need to be shown that immediate gratification, if left unchecked, can stall their hopes of long-term financial success. Show your kids that it’s not just about working harder—it’s about working smarter.
Show them how to set up small goals to help them obtain a larger goal. Explain how to do this on a daily basis. For example, a small (relatively), short-term goal may be to ace an upcoming math exam. The grade your daughter receives helps her achieve the larger goal of an overall “A” in math for the quarter. That overall math grade, in turn, affects her GPA (grade point average), which is one of the application factors colleges consider. While that one math test won’t determine whether your daughter gets into Yale, it is a step—however small—in the process.
A PENNY SAVED
We can treat money like a burden, or we can wear our financial lives in hop-hop style—loose and free—and have fun. I believe in hard work, but I also believe in fun! Make it fun for your child to be a smart, happy saver.
Reprinted from Banking on Our Future by John Bryant and Michael Levin. Copyright © 2002 by John Bryant and Michael Levin by permission of Beacon Press, www.beacon.org.