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© Kelley Keehn

> positive saving & spending techniques for kids

Further to Kelley's appearance on CFRN TV Edmonton on April 24th, 2006, the following are the banking guidelines she discussed.

 

Ages 5 & under:

  • Just a piggy bank for saving all money that your child receives.  This bank should be emptied as the child desires.  This is a time to teach your child about dollars, coins, their value and what they can purchase.  Keep the spending and filling of this bank fun and pleasurable.

Ages 5-10:

  • A piggy bank plus a "targeted savings bank".  Help your child determine what percentage is split between the two banks.
  • The targeted savings bank is ideal for items that require advanced savings, such as a summer pass to the swimming pool, a new super soaker, etc.  Dialogue with your child as to the items that require advanced thought and savings.  If you know your child will not be able to reach their goal, perhaps you might match their savings (one for one, etc.).
  • Allowances.  This is generally the age group that parents consider paying their child an allowance.  Consider doing so as well and discuss the amounts and frequency with your child.  If you have always purchased everything for your child, they might not appreciate the value of the dollars being spent.  Allowing them to make spending decisions, they might be more choosy with their purchases.

Ages 10-15:

  • All of the other banks as describe above with the addition of a "long-term savings account".  I would recommend that this account be set up as your child's first formal bank account.
  • This account requires long-term savings and goal setting.  The end desire may be a trip to Europe that the school will be taking in the next three years, for example.  Again, if you feel dollar matching is required to achieve this goal, include it in the goal setting stage.
  • Allocation of funds between the three bank accounts.  This age group will likely start to receive more income from family birthday's, allowances and odd jobs around the neighborhood.  Discuss the percentage split between their "free spending" piggy bank, their targeted savings bank and their long term savings account.
  • Assist your child in identifying income generating opportunities.  Perhaps they can shovel snow, cut lawns or rake leaves on the weekends for extra cash.  You might enlist their assistance in your summer garage sale with a commission to the child for all that is sold in your sale.  You'll likely be surprised with how many more ideas your child comes up with.

Ages 15+:

  • All of the other banks as described above with the addition of a "credit account".  In a few short years you child will likely have the opportunity to receive their first credit card.  If they don't understand interest charges and responsible usage guidelines, they may think their available credit is money to spend.
  • Determine a credit line of sorts between you and your teenager.  There might be times when a snow board or new roller blades are on sale (even if you are going to purchase this item for them anyway) and all of their other savings have been depleted or allocated.  Set the amount of credit the teenager has available, the terms of payback, any interest you would like to charge and the ramifications for default or non-payment. 
 

If you have any questions, ideas or comments on the saving & spending process that I've outlined above, I'd love to hear from you.  Please email me any time at wealth@kelleykeehn.com.

Note:  Kelley Keehn has been in the investment industry for over a decade.  Since merging her financial planning practice in the summer of 2005, she no longer holds any licence(s) to sell securities of any kind, nor provides advice giving, nor recommends or endorses any financial product.  Please consult your financial, tax or legal council for investment advice.