Banking

It is important to teach children the value of money, starting at an early age. When your child gets money, do you let them spend it all? Do you have them put half aside?

Saving and spending habits start to root as soon as your child has it in their hands. By the time they are teens you can tell which children were allowed to do what they want with their cash versus the ones who had reinforcement from home about saving and spending wisely. Sure we all goof up once in a while, but if your foundation is solid enough you won't tumble.

When your child is able to understand the basics of saving and spending, open up a joint savings account for them. Many banks have special accounts where no minimum balance is needed, and having your name on the account insures safety of the account's activities...especially as your child gets older. Let them be part of depositing money they've received, and watching their balance grow. Only allow for withdrawals after you have discussed with them the whole picture...what is the item, why do they feel they should withdraw for it, & do they realize what their new balance will be? Sorry, money really doesn't grow on trees, and it will not magically reproduce in your account after you take some out ;-)

I would suggest only allowing withdraws for items that are substantial...meaning not for toys, movies, etc. My first big purchase was a stereo system. It was a very proud moment that I was able to purchase all the components and still have a sizable amount left in my account.

An important reminder: In many cases, once your child turns 18, the "no minimum balance required" rule goes out the window...and normal bank fees may apply. Yes, we just had this happen on our son's account - DOH!

Money

Kids and Money - Given or Earned?

We have never given our children an allowance. Handing over cash for doing nothing makes no sense to us. Sometimes they would receive money as a gift from a relative, and they would learn to spend it wisely, save it, or do a little of both.

As they became grade-school age we did start to pay for grades on the Report Cards. It wasn't a lot, but to them it meant the world. They have always worked hard to obtain outstanding grades. Yes, getting the good grades is an accomplishment in itself, and the money is like a bonus.

The older they get in school, and the harder the classes become, the more the letter grades earn. We only pay for A's and B's, with a significant difference in the two. And as they hit the High School years we give an additional bonus for a Report Card with All straight A's, or a mix of A's. No bonus if there are any B's.

Some of you are thinking we are way off base. Perhaps you think we are overly pushy with our children and their grades. Is life going to be any easier on them? Will they not be pressured in their jobs to do their absolute best? When they are adults is someone just going to magically hand them cash once a week, for doing nothing?

One of the best results is our kids are A students. Our son was #1 in his class of 400 for his Sophomore year, and #2 in his Junior year, and the same year became a dual-enrolled student and attends the University full time. As you can imagine, we are SO proud, and better yet...he is very proud of his accomplishments!

***Recently I read this great article in Newsweek, by Newt Gingrich. His ideas are not far off from ours.