One of the most important money lessons for children to learn is the concept of saving. When setting ground rules for an allowance, consider requiring that the child set aside a portion of his or her money for future goals. Make sure the goals are meaningful to the child, such as purchasing a new bike (as opposed to saving for college). Here are a few tips to consider:
For younger children – Make the process of saving visible, fun and physical. Use a large jar with a picture of the target purchase taped on it or a brightly-colored piggy bank shaped like a favorite cartoon character. Find creative ways to help the child count and record his or her money.
For older children – Consider a savings account at your local bank to teach the concept of interest. Many banks have "kids accounts," with simple recordkeeping that makes it easy for a child to track his or her account.
For larger purchases – Consider matching the child’s savings. For example, contribute a dollar for every two dollars saved towards the purchase of a new pair of brand- name sneakers worn by a favorite basketball player. Or contribute a flat amount of, say, $30, and let him or her come up with the rest.
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