Tip for teaching kids about personal finance
We recently offered suggestions for teaching your children about personal finance. Here is another approach:
Have your kids divide any money they receive from allowance, gifts, baby-sitting jobs etc. into the following categories -- Giving, Spending, Short-Term Savings and Long-Term Savings.
How are the categories defined?
- Giving -- for charitable contributions.
- Spending -- for small purchases (food, movies).
- Short-Term Savings -- for fairly expensive purchases (rollerblades, iPod).
- Long-Term Savings -- for more expensive purchases in the future (foreign travel, car, house).
It's up to you to determine what percentage of incoming monies goes to what categories. You might consider the following -- Giving (10%), Spending (30%), Short-Term Savings (30%) and Long-Term Savings (30%).
Comment: We look forward to your comments!
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