Question:
My wife and I have been discussing our money and our children. We have a six year old and a 10 year old. At what point should kids get control of their money?
Answer:
We believe one way to help children learn the value of money is by teaching them to work within a budget. Parents can provide an allowance to the child with a clear understanding of how much should be used for clothing, entertainment, long-term purchases and how much should be saved. For example, if you provide your child with a clothing budget of $100 a month, and the child chooses not to spend his clothing budget on necessary items like underwear and socks. Then, as the parent, you buy your child underwear and socks for birthdays or holidays, instead of the video game he desires. As soon as your child is old enough to understand this responsibility, you may consider opening a checking account for the child.
We believe you should also teach your child that 10% of all you earn is yours to keep, meaning that 10% should be put into savings. Teaching savings habits when the child is first learning how to manage money should develop into a life-long discipline.
We also encourage parents to consider buying one or two shares of a stock the child is interested in. For example a few shares of McDonald’s Corp. (NYSE: MCD) may also provide the opportunity to teach the child about the investing.
At Henssler Financial we believe you should Live Ready, and that includes teaching your children sound financial habits. If you have questions regarding your financial situation the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
