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Spending, Saving and Sharing: Little Betty and Delayed Gratification

In my previous blog post, I introduced you to Little Billy who had grown into a 30 something, still living with his parents, no job, no college education, video gaming machine. We discussed how a college savings plan may have helped avoid that situation altogether.

Well Little Billy can’t possibly be our only parenting fail, can he? No, no, no. I now would like to introduce to you the sister of the family, Little Betty.

Okay, she might look a lot like Veruca Salt from the Charlie and the Chocolate Factory movie, but I think you get the point. Little Betty most likely was not taught about delayed gratification or the value of a hard earned dollar, and unfortunately has developed some poor habits. In fact, research shows that money habits are formed by age seven.

Because habits are formed so early, it’s critical that we start educating our children early about money. Here are some of the top lessons that we can teach our children about money:

  1. Money comes from hard work (Little Betty thinks it comes from an ATM)

  2. Delayed Gratification (But she wants it NOW!)

  3. Control over Money

  4. Charity

All of these lessons can be enforced through teaching your child to budget. A simple budgeting system to use with your child is the three container budgeting system. Simply create three containers (jars, envelopes, piggy banks, etc.) and label them “Spending”, “Saving”, and “Sharing”. When your child receives money for allowance, chores, gifts, etc., help your child split the money up between the three containers. It’s up to you how to divide the money, but an easy method is to simply split the money equally among the three containers.

The Spending Container: Holds money that the child can use to buy that toy that he/she just has to have. When your child realizes that the toy costs $5 and he/she only has $2 in their spending container, the child will quickly begin to understand the value of the saving container.

The Saving Container: Holds money that the child is saving for a specific item in the future. You can help the child visualize how long it will take to reach their savings goals by creating a savings chart.

The Sharing Container: Holds money that the child can use for charity. Giving can be empowering for children and give them a sense of pride in helping others. Let the child choose who he/she helps with the money. Examples might include the collection basket at church, an animal shelter, or a friend in need.

While the container budgeting system is a great tool for teaching young children about money, the most influential method for teaching children about money is to lead by example. Let your kids see how you make purchasing decisions. Explain to them why you chose the generic brand over the name brand or why you waited to purchase an item even though you really wanted it now. Your children are watching and want to be just like you, so set good financial examples and hopefully you’ll avoid having an “I want it now!”, Little Betty of your own.

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