A Lesson on Savings for Grown-ups and Kids

B.L.A.C. Reader: Help us to (learn and) teach our children the value of saving, investing and how to maneuver in the world of stocks and bonds.

Bridgforth: When it comes to your children, don’t live by the philosophy, “Do as I say, not as I do.” Instead, be a role model and practice what you preach. You are a greater influence on your children than you realize. Whether you teach them how to make a budget or balance a checkbook or not, they consciously and unconsciously absorb your attitudes and behaviors regarding money.

As a parent, it is imperative for you to learn about money, save automatically, prepare for the unexpected and remain consistent over time. Commit to paying yourself-save-like you commit to paying your bills and your taxes. Don’t think you have to wait for a big chunk of money before you can begin saving and investing. Start with whatever you can afford, no matter how small the amount.

Here are some things you should do now:

  1. Have a portion of your salary automatically deposited into a savings account, certificate of deposit or money market account. This is a great way to pay yourself first.
  2. If you can’t set up a payroll deduction through your employer, your financial institution can arrange for an automatic transfer from your checking account to your savings account on a specific day each month.
  3. Open a holiday or vacation account. Not being prepared for annual events can be a budget buster. Establish a separate account from your savings cushion to use for funding special expenditures.
  4. Save your spare change. Over time, the spare change in your pockets or purse can add up to hundreds of dollars. Once, my husband and I accumulated almost $900 this way. Many banks now have machines that count your change and deposit the total in one of your accounts.
  5. Do a dollar savings plan. When your cash is flush, set aside all your $1 bills at the end of each day. Once you have accumulated $50 or $100, deposit it in a savings account.
  6. Put your expense checks in savings. If your expense reimbursement checks from work do not need to be applied to a credit card for payment, use these checks to build your savings account.
  7. Deposit at least half of all gift money and bonuses into savings. This is a way to use your money wisely and reward yourself at the same time.
  8. Begin a family dialogue on money matters, goal setting, and family financial objectives. Encourage input and support from your children.
  9. When your child receives money, consider instilling the philosophy of thirds. For example, let’s say your child receives $10. After tithing 10 percent, that leaves $9. Suggest spending a third, $3, on an immediate want, saving a third on a more expensive item and saving the last third for his or her education. This strategy will allow for immediate gratification along with deferred gratification.
  10. Share with your children what it means to have stock or equity in a company. At a public library, investigate companies that provide products or services they want to support. Ask a librarian to help you find resources on the process of investing. Be sure to research socially responsible investing on websites like SocialFunds.com, Calvert.com and SocialInvest.org.
  11. Utilize other online resources. Visit Jumpstart.org, a national coalition of organizations dedicated to improving the financial literacy of pre-kindergarten through college-age youth.
  12. In downtown Detroit, we have an amazing resource in the Rock Financial Junior Achievement Finance Park. This full-day experience provides a simulated, real-life, personal budgeting experience for students. Youth are given a life scenario and then walk to 14 storefronts to make calculations and decisions regarding how to spend their money. Work with your child’s teacher to arrange a visit for his or her class by calling 800-863-4332.
  13. In today's economy, don’t think of a job as a dependable source of income. Create multiple streams of income by selling Avon, Melaleuca, Silpada or some other product line. Or create a small business you can work on in your spare time. Make it a family business and work collaboratively with your kids.

Whatever you do-or don’t do-remember that your children are watching.



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