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Kids love to make money. Whether it’s a group of seven-year olds with a lemonade stand or a sixteen year old with his first real job, they want to make money and spend it. Before the spending gets out of hand, teach your kids to save money. Every child needs a savings account, and as they get older, they should have a checking account. If they have both, you can teach them about personal finance and budgeting.
Split the Income
Before your child starts working, sit down and help them create a budget based on their personal goals. The goals may be something as simple as new shoes, or they may include a car. No matter what your child wants to spend his money on, he needs to understand that getting the things he wants requires him to save his money and be patient.
Help your child come up with a percentage for checking and percentage of savings. Explain that this is a budgeting practice that allows him to save for important things while still having spending money. If you can get a kid to save when he’s young, he’s more likely to continue to save as he gets older.
The Value of Hard Earned Money
If your child has big goals, like a car, make sure he understands that it is a huge investment that comes with big responsibilities. He needs to understand which expenses come with owning a car. Recommend that he put money for insurance, maintenance and repairs in savings. Have him put gas money in his checking account. He’ll learn to budget the gasoline very quickly.
Cars are the best way to teach a kid how to save because a car is such a valuable resource for teenagers.