President and CEO of Citibank's Women & Co., Linda Descano, CFA®, offers the following advice on utilizing another popular tool – an allowance – to help teach children that value of money:
· Divvy it up. Set an amount that you can apportion out to teach savings strategies. For example, if your child receives $5 per month, give him or her five $1 bills. This makes it easier for children to allocate, such as toward saving, spending, and giving.
· Set savings goals. Discuss saving for a new toy or shoes. This could also be a good time talk about opportunities to donate a portion of his or her money to a cause that he or she may care about.
· Invest for their future. For many kids, college seems like a far off goal. Yet it's a goal many parents hope they achieve. Help them feel like they are contributing to the future by discussing long-term saving opportunities.
· Give them room to grow. When it comes to their spending portion, remember – it's theirs to spend, even if it is on the ugliest pair of shoes in the mall. Better for them to learn now when the risks are small.
Whatever the teaching tool, what's important is sharing these lessons early and consistently. For more helpful advice, visit womenandco.com and Women & Co.'s award-winning blog, Insights & Outlooks.