We all remember those chores that we had as kids. Cleaning your room, walking the dog, or the dreaded mowing of the lawn. What seemed like torture instilled some of the qualities that people might call your strongest attributes today. But when it comes to your children, why do you feel the need to go easier on them? After all, those chores create some valuable life lessons that will pay dividends in the long run.
Set up a list of chores for your kids that have a pay structure associated with each task. You might want to consider having core chores that are required without pay, and more advanced chores where they can “work to earn”. By doing this, you are creating a mentality that money is directly tied to the work they put in. This life lesson is one that will help your children thrive when they go off on their own, and ensure that you won’t be forking out rent money for years to come!
The Lifepoint Personal Spending Plan™ For Kids
Now that you have created a working pay grid for your children and have fully committed to the system, it’s time to teach your child about the time value of money. This is how we get over the instant gratification hurdle.
You need to have three different accounts for your kids to deposit their hard-earned money into. By “accounts” I mean something tangible such as jars, piggy banks, sand buckets, or get creative with painted clay flower pots (so they can watch their money “grow”).
Now, Soon, and Later
Based upon your preference and time availability, either each day or each week, have a meeting with your children. In this meeting discuss the importance of depositing money into accounts. Each has a designated timeline that allow them to purchase items. This will help them understand that they can have some enjoyment of their hard work now, but some of it will be so they might be able to enjoy bigger or even better items in the near and later future. An additional great component to the three-account system is that it will help your children learn some basic math skills.
Bucket 1: Money Now
50% of your children’s earned income for that week or day will go into the first account or money jar. This account is designated for all of the items they might want to purchase now. This might be candy, baseball cards, and small new toy, etc. You may need to coach them of what is really needed to have now, but nevertheless, this is their account for now money. It is also best to have chores that pay in whole dollar amounts to make the math more simple.
Bucket 2: Money Soon
30% of your children’s earned income for that week or day will go into the second account or money jar. This is money saved for things they want or need in the near future. Future is a tough concept for kids, so maybe explain that it’s for more expensive things that they could buy next week or in the next month.
Bucket 3: Money Later
20% of your children’s income for that week or day will go into a third account or money jar. This is money that is designated for a pricey Xbox system or a collective doll. The idea is something that would take them quite a bit of time to save up for. This will be the most challenging bucket for them as they see the money building up, but it is a very important concept for your children to learn. It’s easier if that jar is always labelled with the specific item they want to buy. This will help them remember why they are saving that money.
Another purpose for the third account could be for charity. I’ve seen parents use this money jar to teach about the concept of tithing or giving to those in need. This is another fantastic teachable moment for them to understand delayed gratification.
A Results Driven Process
By following these guidelines, you will be teaching your children lifelong lessons that will put them ahead of the game. These concepts flow through to life and any profession that your future child might end up in.
By teaching these lessons now you are teaching successful principles to your children when it matters most, and not when it matters least or when it’s too late. The Lifepoint Spending Plan™ For Kids will provide you with the guidance necessary to set your children up for success. With a plan in place, you can be confident that your children are ready to enter the real world– even if you hope that day never comes J
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Michael Metzger CA Insurance LIC# 0H86440 is a Registered Representative with and Securities and Advisory
Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.