Teaching my kids – Part 2: Learning to save and setting goals
I will be writing some post to try to educate my kids. I know they are still very young (4 and 7) but it is never too early to start. And the can read these blog posts later on in life 😉 (This is probably the case, because they don’t speak or read English very well at this moment – You got to love an understatement!).
In Part 1 I told you how we try to get them familiar with money and teach them the value of money. I also wrote about their allowance.
When the oldest turned 4 years old we started with giving them allowance. Just €2 each month. We told them that they have to save at least half of it every month. They other half they, if they have a good purpose for it, can spend it.
After I wrote this post, I had a conversation with my wife about the allowance of our kids. Is € 2 a month too much? Or too little? What do other parents give their children?
Actually we had no idea. So we went on the Internet to visit the site of NIBUD. This is a Dutch independent foundation that informs and advises about household finances (The National Institute for Budget Education). This foundation has the mission to increase the self-reliance of consumers in the field of household finances. You name it, and they have already done some research on it and posted it on their website. From budgeting, financial planning, the cost of having children to debt Aid. The list on topics is very long.
This foundation is already more than 35 years old and is an established name in The Netherlands. Too bad for my non-Dutch readers that they don’t have an English version of their Website.
As I wrote, they have webpages on all kind of topics, and also one on allowances for kids.
According to Nibud the allowance for a 7 year old is € 1 to € 2 a week. Well this is way more than we have done for the last year. So we decided to follow the guidelines of the NIBUD. For now we decided that both kids are getting the same amount a week. Next year we will look at it again.
We sat down with the kids and talked about allowance and what to do with it. We discussed the amount and day of the week on which their allowance is paid. Together we decided to pay their allowance every Saturday. And we gave our kids their first raise. From now on they are getting € 1 each, every week.
They already know that they have to save at least 50% of their allowances. Without telling them this, the oldest one told it her self! (Yes!! our upbringing/education is getting through 😉 )
The other have they can spend if they have a good goal. They want a new Lego train and that’s their goal. We talk with them about their goal and how to reach it. A Lego train is about € 160, so the oldest one figured out (with some help from us), that she has to save a lot, and for a long time. She looked up and said, it is a really big goal. And then asked the right question: How can I save harder, of how can I increase my income?
Both really good questions and we talked about it. We told them that they for instance could use their birthday money and report card money. They saw that by doing this they could reach their goal sooner. That helped them and especially the oldest one, is still thinking about the subject.
One of their actions after the conversation was to build a piggybank from Lego. This helped them to visualize her goal.
So they learned about saving and setting goals. And also what it takes to reach a goal. I’m a proud dad!
This is my second blog about teaching my kids. I hope my kids at the age of say 18 have all the financial knowledge I have right now. This would be a huge advantage for them! And that’s why I started these blog post series.
How much allowance do you give your children? And how do you help them to set goals? I like to hear from you!
Thanks for stopping by.