My wife and I have been discussing our money and our children. We have a six year old and a 10 year old. At what point should kids get control of their money?
We believe one way to help children learn the value of money is by teaching them to work within a budget. Parents can provide an allowance to the child with a clear understanding of how much should be used for clothing, entertainment, long-term purchases and how much should be saved. For example, if you provide your child with a clothing budget of $100 a month, and the child chooses not to spend his clothing budget on necessary items like underwear and socks. Then, as the parent, you buy your child underwear and socks for birthdays or holidays, instead of the video game he desires. As soon as your child is old enough to understand this responsibility, you may consider opening a checking account for the child.
We believe you should also teach your child that 10% of all you earn is yours to keep, meaning that 10% should be put into savings. Teaching savings habits when the child is first learning how to manage money should develop into a life-long discipline.
We also encourage parents to consider buying one or two shares of a stock the child is interested in. For example a few shares of McDonald’s Corp. (NYSE: MCD) may also provide the opportunity to teach the child about the investing.
At Henssler Financial we believe you should Live Ready, and that includes teaching your children sound financial habits. If you have questions regarding your financial situation the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at email@example.com.