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Reader-Submitted Question of the Day - Day 4
By JLP | May 2, 2008
Today’s question of the day is a really good one:
JLP,
I’m in the process of teaching my 11-year old daughter about money and the importance of saving for the future - regardless of her goals (i.e. college, a home, a new car, etc.). My personal efforts are equal to saving approximately 25% of my income, but for a child without living expenses I feel the percentage should be higher. I want to avoid forcing her to save in fear that she will, as many pre-teenagers do, rebel and not want to save at all. So…
What percentage of her money should she be allowed to spend on frivolous items and how should I go about explaining the importance of saving?
Thanks, Beth
That’s a tough one. Kids (and many adults) have a hard time seeing past their noses and therefore do not understand the concept of saving for the future. My boys at ages 11 & 12 are just now starting to understand the importance of saving money.
One thing you can try it to let your daughter pick out a toy or something that she wants that requires her to save money to buy. Cut out a picture of the item and help her figure out a savings plan to meet that goal. You could even match her savings as a way to encourage her to save. There is nothing that will make a kid feel better than the realization of a goal. I remember when my boys bought a Playstation 2 several years ago. They were so proud of that purchase.
Another thing you could do is to show your daughter your savings account for something that you and your husband is saving up for and explain to her why you are putting money back for that particular goal.
Take the time to explain to her the different ways to buy things (cash vs. credit card). Explain to her how buying something with a credit card is really using someone else’s money and that it has to be paid back with interest and that interest is money that could be spent saving up for something else.
One last thing you could do is show your daughter what small purchases can add up to. I know my boys went through a stage where they had to buy something every time we went out. It drove me nuts but I reluctantly kept my mouth shut and let them spend their money as they saw fit. Eventually they figured out that if they bought a pack of gum or something small, it would take longer for them to reach their goal of buying a video game or some other larger purchase.
As far as the percentage that should go to savings goes, I don’t see a problem with you requiring your daughter to save 50% of her allowance. But, I do think that if you require to her to save that much that the other 50% is up to her to decide how to spend (as long as she’s not buying something really stupid). Kids do need to learn that there are consequences for their actions and if we as parents don’t allow them to feel the hurt, they won’t learn.
Finally, your daughter should be thankful that she has a mom who cares for her as much as you do. My guess is that eventually she will.
Now it’s time for AFM readers to weigh in with their thoughts. What advice do you have for Beth?
Topics: Kids and Money, Question of the Day |
