Show kids how to spend and save $$$ sensibly



We’ve all seen it happen. A 10-year-old squanders her entire birthday bootie right after her pinata party. Her older brother rakes in a lot of cash when he’s confirmed; then, heads straight to the electronics department to buy himself a Wii.

Your nephew spends all his graduation money on a month-long camping trip out West. Your niece blows every penny she earns on the latest fashions. What’s an aunt, uncle, parent or grandparent to do? We all want the children in our lives to save at least part of their windfalls for their future. Where do we start?

How do you convince kids to handle money wisely?      

Sometimes you almost have to draw a picture to show kids how to save for bigger and better things. If the young people you care about aren’t open to suggestions or bristle at being told what to do, give them gifts that force the issue. Find ways to make sure that some of each present from you gets put away for later.

Split gifts into ‘spend now’ and ‘save for later’                                                                        

One way to teach kids to spend and save sensibly is by giving them split gifts. First, start a savings account in both your names for each child on your list. For every dollar you give one of them outright, put a dollar into their account. If you usually slip a $50 bill into a birthday card, insert just $25 instead. Deposit the other half into your joint savings account. If you’d rather surprise him or her with books, toys or games, go ahead and wrap that pretty package, but don’t forget to add the dollar value of your surprise to your joint account.

Tell kids you won’t withdraw the cash you’re saving for them until they need it for something big. Remind them that when they’re older, they’ll want to have money to spend on more expensive items like computers, or cell phones, or maybe even sports camps. From birthday to birthday or between holidays, bring them bank statements, showing how much their money has grown. The split-gift strategy ensures that young people hang onto a few bucks, even if you’re the one who puts the money in the bank for them.

Encourage saving in other ways                                                                                                                                                    

Government bonds offer another way to prove to youngsters that saving pays. Traditional savings bonds, purchased at lower prices than they’ll be worth in 10 years, stretch smaller gift amounts to more. Youthful recipients will feel great to get $100 or so – even though they’ll have to wait a few years to cash in at that rate.

As baptismal gifts, savings bonds are good options, yet lessons on saving are lost on babies. However, if you give a $100 bond to an 8-year-old, you can explain that his gift will be redeemable around graduation time when he’ll need money. Gift-givers can also show kids how to plan their financial futures by helping them fund 529 college savings plans with small contributions for each special occasion during their K-12 school years.



Manage Your Money . . . financial facts for a brighter future provided by Advancd Asset Management LLC                           Follow our blog:                  Ronald Van Surksum, CFP                     4555 Wilson Ave SW – Suite 2               Grandville, MI 49418                                                                                                                                                                                                                                                                                                                                           Phone: (616) 531-5220                            Cell: (616) 450-8439

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