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by Nancy Anderson
February 06, 2020
by Nancy Anderson
February 06, 2020
When my sons were in elementary school, I wanted to make sure they nailed three basic money lessons: saving, spending, and sharing.
As an adult, the art of managing money isn’t much different from the piggy-bank lessons we teach our children. If we can get these three things right, we can master our finances.
How my kids learned: My boys earned an allowance each week, and they were required to save half of it. Since I worked at a bank, I simply made direct deposits into their savings accounts on their behalf. I would come home from work and show them their statements so they could watch the money grow.
These funds were designated for an idea that I planted in their heads: a special trip their senior year or during a summer when they were in college. This got them thinking and dreaming of a future event (delayed gratification) and taught them the advantage of having money set aside for something they hadn’t realized they would want.
Brian used the funds to live in San Diego for a few months as a surfer before beginning a rigorous career in the United States Navy. Rick caught the travel bug and ended up taking two trips, one to New York City and another to the Philippines.
What you can do: Set up automatic savings so some funds never hit the account you use for general expenses. Learn to live on what is left. Your 401(k) is perfect for this, since money is taken out via payroll deduction and won’t touch your bank account until you make a withdrawal from your 401(k). You also can set up automatic transfers to savings or investment accounts.
Earmark accounts for goals. It’s a motivator to have a savings account for something you are passionate about. If it’s travel you love, you can plan your trips around the growing balance in your account.
How my kids learned: Learning to spend is just as important as learning to save. I wanted to teach my boys to spend on things that were important to them and stretch those dollars wisely. So I let them spend half of their allowance on whatever they wanted (within reason, of course).
Once the funds were gone, however, that was it for the week. If they wanted to go the movies, I’d pay for the ticket, but if they wanted to play video games or buy drinks, popcorn, and candy, that was on them.
One lesson they learned quickly was to buy gently used items and resell them. For example, they always wanted the new release of the latest and greatest video games … until they realized the cost was well beyond their combined allowances. However, they could afford last year’s release at the used games counter, so they would make their purchases there for cash and partial credit for the games they turned in. This way, they stretched their allowance money.
What you can do: Determine how to get what you want with the least amount of out-of-pocket spending. For example, do you like to read? Watch movies? Listen to audio books? Play video games?
You may be able to do all those things at no cost. Instead of buying books from the bookstore, subscribing to movie channels, and purchasing audiobooks, check out your local library. They may have all of these services for free.
Think about items you use that you might be able to get for less than you’re paying now. What items could you purchase gently used on consignment, at an estate sale, or online using a service such as thredUP?
How my kids learned: As a parent, I could have done a much better job educating my kids about giving. Our family did, however, sit around the dinner table and talk about our “good deed of the day.”
One of our family values is kindness, so we discussed one thing we did each day that was kind to another human being or four-legged friend. I personally think this helps kids to develop empathy for others, and it seemed to work with mine.
My sons helped kids who tripped and dropped their books. They stood up for (and stood with) kids who were being bullied. They also gave part of their spending money to charity and donated items such as their old toys to thrift stores to raise money for the Salvation Army and other causes.
If I had to do it over again, I would deepen the lesson by helping them nurture a specific cause or charity that was important to them personally. By sharing their time, money, and resources, kids learn important lessons, including being grateful for what they have.
What you can do: Whether you give of your time, talent, treasure (your hard-earned money), or some combination of the above, consider where you’d like to leave a mark.
Donating to charity on a monthly basis, no matter the amount, has an impact. Charities often have options for automatic monthly donations as low as $20 per month. Your employer may offer a contribution via payroll deduction to charities to such as the United Way. If you attend a church or synagogue, you can contribute to the local community or worldwide charities they support.
Whether you are one of the volunteers silently working behind the scenes at a charity or you give a bit from your paycheck every month, sharing your resources even in a small way can impact others in a big way.
I remember when I was a little girl myself, my mother told me “do what I say, not what I do.” I never quite understood it then, but now I see she wanted me to live up to her ideals. There is certainly nothing wrong with that, is there?
We can all learn from the lessons we try to teach our kids. I certainly have.