In the last entry, I suggested that 30 percent of your child’s allowance be saved for delayed gratification or short-term goals. If they want that new game, they actually have to save up for it. This also teaches them to spend within their means so they do not get into financial trouble later.
You also need to help your children think about the future, so they should be saving 30 percent of their money for big-ticket items in the future, like college or a car at 16. These long-term savings goals help them learn that they have to plan for the long run. This helps them achieve future goals and instills an understanding of long-term planning into their savings.
Let your kids use piggy banks for their coins. When they save for something they want, they can see money growing. The lesson is: “I saved for it, and look what I got!” They receive not only the prize, but also the satisfaction and pride when they learn that “I can do this – I can set goals and reach them.” For younger kids, give them jars for each portion of their saving goals. You will not believe how focused they will become, how fascinated and proud they will be, seeing the longer-term jars fill up.