Teach Your Kids How to Save Early

by Joel B. Goldhirsh and Karen Q. Goldhirsh

"Financial Literacy is not just about the money, but about launching great kids." -Joline Godfrey, author, "Raising Financially Fit Kids"

Start at the beginning of a month or week in , and, in the appropriate categories, have your child record all the money he receives and spends.

Clarify which expenses your child is responsible for and those that you will cover. Even if your child is not responsible for certain expenses, it is important that he understand the true cost of his lifestyle. If expenses will be shared, use the percentage column to indicate the percent she is responsible to pay.

Have your child track his income and expenses for several months, or for an entire year. You and your child should save the receipts for every item and service bought in , as saving these receipts may help avoid debates over what services and items cost, and can help your child to learn important record-keeping skills.

The next step is for you to review this at the end of each week or month to see how your child is doing. Is she spending more or less than she receives?

The key to success is your guidance. With your support and encouragement, your child will learn to manage and track his money. Reviewing the expenses may help your child decide to spend his money differently, eliminate certain expenses or spend less on certain items. The use of this worksheet might also help clarify the need for your child to earn more money through a job or entrepreneurial activity to afford the goods and services she desires.

While many child psychologists believe children should be able to handle money on a monthly basis by the time they are 15, only you can truly determine the financial readiness of your child in .

By tracking the expenses of living, your child should gain an appreciation of the energy it takes to manage a family budget. In addition, your child will better understand some of the hidden costs of family life, and shared information will likely help your child feel like a mature member of the family. This exercise is an important step in providing your child the skills needed to become financially independent.