Everyone enjoys having some money all their own to spend or not spend in the way they choose. Adults and children need to have some money of their own over which they have total control. Parents can certainly give guidance but must release authority to their children to ultimately make their own choices and decisions. Of course, money can be spent only once. If a child decides to spend all they have on candy today, then tomorrow when they discover some toy that is exactly what they want, they will not be able to buy it at that time.
Dan, Dave and Tom loved to play with the four inch tall G.I. Joe figurines (not dolls). At some point each of them earned enough to buy one with their income from a week’s pay for chores. However, they could only spend half their pay because they were required to allocate one quarter their income to savings and tithe ten to twenty five percent. This meant they had to wait two weeks to buy one figurine. This was an important lesson in delayed gratification and goal setting. Unfortunately for them, the cost of the figurines rose at about the same rate as their income for quite a while. Extra jobs were calculated in terms of purchasing more G.I. Joes sooner.
Saving money is a life-long skill. It is an important habit to develop. Money spent out of savings had to be planned for and discussed with a parent. Children rapidly change their minds regarding what is important to them and why they want certain items. Time is a good sorter of needs and wants and priorities.
As adults there will always be unexpected needs or emergencies outside of budgeted items. This is where savings bales us out of a potentially difficult place. Shortly after college graduation our daughter moved into her first apartment. She and her friend selected a two bedroom, third story apartment of an old house. I remember questioning her about her budget and financial stability. She assured me she could afford this move. She did have full time employment. I asked her about handling unexpected expenses. “Like what?” she asked. “I don’t know what it will be”, I replied, “something you don’t know about yet.” She did not think any unexpected expenses would occur. Everything was all planned. On the day before moving day she and I did much cleaning in that old apartment including washing windows. As she slid open a double hung window to wash it an unsecured window air conditioner unit plummeted two and a half stories landing with an awful and fatal crash. Oops! There was that first unexpected expense. Fortunately, the landlady did not require her to purchase a replacement unit. Our daughter lived without air conditioning. (The guy in the pic is the cousin who helped her move, not her roommate.)
In our house an additional forced savings happened at birthdays and Christmas. During the four weeks prior to one’s birthday and Christmas purchasing of wanted items was forbidden. This prevented duplication of desired items and gave others time and the opportunity to give to you the things you were wanting.
Once a child is employed and earning an increased income they need to learn to do banking. Banking is just a mature system of envelopes. They should open checking and savings accounts. Related to them are several skills which need to be learned.
- How to write a check.
- How to record that check in the registry.
- How to make deposits and record them.
- How to reconcile an account with the bank’s records.
- How to do online banking.
- How to responsibly use a debit and/or credit account.
- How to keep financial records and file income tax returns.
For teens debit and credit accounts should have limits. Credit cards should be paid in full every month. They are an important tool, not a license to spend recklessly.