Recently I received the following money choice question from a parent:
My child will soon start to learn about money with the Money Savvy Pig. I would like to teach him that a percentage of each dollar goes into each category. Can you recommend a percentage for each category? I realize this is really a personal choice but would really appreciate your suggestions when considering what I would like to teach him.
Thanks for all you do!
My response – a few tips
Okay – a couple of things to think about here. First of all, always teach in a way that is “age-appropriate”. So, based on the age of your child, select your approach. When you first begin to use the Money Savvy Pig, which would mean that your child has real coin and currency in their hot little hands to deposit, step back and first explain each one of the money choices in an age-appropriate way. There is a video or two on our website about how to explain those choices. Take a minute and look it and then have a go at it with your child.
Before they deposit one penny
First, as I said above, talk about what the choices are – then, before they make a deposit, talk about goals for each choice. For a choice to be meaningful, you have to know what your goal is for that choice. Set some goals – based again, on the age of the child. I know that “college” is not an awe-inspiring goal for a 7 year-old, but a larger save goal – like a bike or computer might serve well as an invest goal to get the child to understand the difference between save and invest. Save should, at the youngest ages, be very short-term, toy, book, video. While invest can be a year out. For the older child, save goals are a year away and invest, 10 years in the future.
Step back & observe
Then, once you have had the choice and goal discussion, step aside and let your child make the distribution – without any input from you. Just observe. My blog has more on this – but take a look at the video and do not prescribe an allocation of deposit – the child will show you what’s important to them as they make more and more deposits in any one choice. It’s then that you as a parent can really see where their head is and can then incent the choice that is being ignored – or teach to that choice – until the child is more aware of or more comfortable with it.
Make sure they have enough coin to make a number of choices. If they are very young, make sure they understand the values of the coin and/or currency they are using. As you begin, the point is to make this choice provocative. Make them want to take any and all money to the pig! It will develop a habit of money choice and delaying gratification. You may need to remind them when they are young and incent them by matching each deposit when they are a bit older as they are dying to spend, spend, spend!
Now, if you observe your little darling is putting it all in spend, then you have your work cut out for you – 😉
Let me know how it goes, Kelley!
Susan, I absolutely agree with letting the child choose their allocation to spending, saving, investing and charitable giving. As you wisely point out, not only does it help us parents understand what goals their children truly value, it enables us to provide incentives for choices that jibe with financial values we hope to impart to our kids. Also, seeing how they allocate their money is a great discussion starter to help them think more deeply about the consequences, good and bad, of their choices.