Making Your Kids Save Half the Money They Are Given
I have a nine-year-old stepson who receives an allowance of $9 every two weeks. Out of his $9, $2 goes to savings and $1 goes to the charity of his choice, leaving him $6. So, from his allowance, he is able to save $52 per year - not bad, but at that rate, he’ll be lucky to cover the cost of textbooks for one semester of college.
If you really want your children to get ahead financially and make saving automatic, you’ve got to set savings rules for their largest source of income: cash they receive from relatives. I would estimate that my stepson probably pulls in an amount equal to his allowance in cash gifts from relatives each year.
A few years ago, we started making him save half of this money. And by “save,” I don’t mean “I’m saving for a Game Boy.” It has to be for a long-term goal, such as buying a car or paying for college. Today, he has $583 in the bank.
It was a difficult transition for him at first, but it’s working better than I had hoped. He now voluntarily saves half of all non-allowance money he receives. When I asked him this morning what he plans to buy with his proceeds from our upcoming garage sale, he replied, “Well, I’m going to save half of it, and buy something with the rest.” I was fully expecting him to say “video games.”
We plan to continue this requirement through high school, and also make him save half of any money he earns from part-time jobs.
What are your thoughts on this? Do you think it will make it easier for him to save a large portion of his income as an adult? Or do you think this will backfire and he’ll turn into a spendthrift once we’re not there to “make” him save?
All I know is that I wish my parents had made me do it.
4 responses so far
i think it’s a great idea. i’m trying to work on some kind of plan for my 4 and 6 year olds. right now they get money from relatives and can’t wait to spend it on a piece of plastic. i let them spend some, but i don’t have savings accounts for them yet. i’m working on it, though.
it sounds like it’s getting to be habit for him, so that’s fantastic - it’ll prob. always stick with him, no matter what. he’ll get a little windfall as an adult and be like, “half to savings… ” as a reflex, rather than an afterthought! wish that worked for me!
i, on the other hand, was the tightwad kid - my dad said i squeezed every penny so hard he thought i was hoping it would turn into a dime! but seriously, i was so tight with money, and then i went totally spendthrift as an adult! now that i’m working so hard on debt repayment, i’ve swung back to the tightwad mode. i think, though, that if my parents had basically insisted that half of my money go into savings and half needed to be spent on something fun (or saved up for a specific bigger purchase), i might have had a more moderated approach. hard to say!
I think its awesome what you’re doing! I don’t have kids, but I recently gave my cousin similar advice. She’s in college, working part time, and other than her phone has no expenses (on scholarship, and gets food for free at work). She thought it was a great idea, and I hope she sticks with it!
I guess everyone is different, but I would think if a kid starts early enough it’ll just be one of those things “everyone” does, and he won’t think twice.
Whew, that’s a relief. Wouldn’t want to be the “evil stepmother.”
I don’t recall ever having a savings account (or even a piggy bank) as a kid. Finances weren’t really something that was discussed in my family. I’m hopeful that our generation will be more open and proactive about finances with our kids.