Use this opportunity to teach your kids about saving. Talk with them about where they get their money. Do you give them an allowance? Do they get gifts of cash for special occasions like their birthday or Christmas? Some of your older kids may be babysitting, cutting grass, or in the next few months, shoveling snow to make a little extra. While it is great that kids have access to funds, it is also important that they learn to use these funds appropriately.
Pay Yourself First
This is the most important concept that you can teach your children. Encourage them to save a portion of the money that they get first. Instead of buying things and seeing how much they have left to save, teach them to set aside their savings first, and then see how much left they have to spend. Starting kids on the savings habit will help them throughout the rest of their lives.
Save with a Purpose in Mind
Help your kids set savings goals, and determine the amount they will need to save each week to meet these goals. If they want to buy a new video game that costs $100, help them decide how much they are willing to save each week, and how long it will take them to save the money to purchase that video game.
While a piggy bank is a great encouragement to saving, help your kids get started for the future by opening a savings account in their name. It's safe, secure, and helps their money to grow. With a savings account they have the opportunity to earn dividends that will increase their account balance. Also, since a savings account is not sitting on top of their dresser, it is not as easy to take money out on a whim, and gives them the opportunity to think about their purchases before they spend their money.
Let them know that it is okay to spend some of their money, but think before they make their purchases. Does this purchase match a goal that they have set, like the video game, and are they spending money that they have set aside for this purpose? If they spend this money, will they have enough left for other things they may need or want? Kids have lots of wants; you can help them to set priorities and spend their money wisely.
Especially this time of year, talk with your kids about sharing. Not all kids may be as fortunate. Help them to put together a food basket for a family, or use their money to buy a toy to donate to a special cause. Encourage them to be a good steward in their community. When you hear that bell ringing, and see that little red kettle, have them drop a dollar in. You never know, next year they may not need to come to you for money for the holidays!
Best Wishes for a safe and secure holiday, from all of us at NSWC Federal Credit Union.
Vice President – Operations
NSWC Federal Credit Union