- Danh Truong
How to Teach Your Kids About Saving and Spending Money?
One of the old sayings is “Money is the root of all evils,” so should we teach our kids about money?
For my family and most Vietnamese Americans, we consider money as a taboo topic. For example, if you earn a lot of money, you should not talk about it or you try to be very modest about your success. In the American culture, it is the complete opposite. American kids are taught about money from an early age. The concept of money is taught in school, such as counting your coins, how to recognize pennies, nickels, dimes, and quarters. I think it’s a very good thing for kids to learn to be independent and know the importance of money. Here is what I do around the house to teach my kid about money:
Danh's Tips:
Create three jars. Kids are very visual so put money/coins in glass jars so they can see the money. Every Sunday, my daughter gets $3. One dollar will go to a Spending jar. One and a half dollar will go to a Saving jar and the last 50 cents will go to a Giving jar.
When we do grocery shopping, I remind her to bring her Spending money. I also tell her to get something she needs but not something she wants. Note: It does not work most of the time :) because she often gets chocolates or snacks for herself, though one time she wanted to get instant coffee for her grandma because I reminded her that grandma ran out of it.
My daughter always wants to buy more Disney Princess dresses. We buy plenty of these for her, but she always wants more, it's human nature. When we go shopping and if she sees a dress she likes, I take picture of her and the dress. I then tell her she needs to save money for it and at the end of the year, if she can save enough, we can come back and buy it. After a couple weeks, the dress is soon forgotten. As Americans, the desire for instant gratification is strong, but if we take a step back, wait a little longer, the desire usually goes away. So I think the sooner she understands this concept, the better she will be.
For every month that my daughter does not touch her savings, I double it. Just like your employer matching your 401K :). I think it’s important to teach kids the concept of compounding interest and the power of time early.
I’m interested to learn about how you teach your kids about money. Let me know by email or type your comments below.
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Danh Truong CAL BRE#01951829 Realtor at EQ1 Real Estate danh@eq1re.com
Danh is a team member of EQ1 Real Estate and a Realtor practicing in the Greater Bay Area. He has been a personal finance student for the last 10 years. As a Coach for United Way Silicon Valley Credit Coaching program, he trained and educated low-income clients to improve their credit reports and scores. He helped them with budgeting and improving their finances. He is passionate about helping Vietnamese-American students manage their personal finance.