When did you start earning money and what was your job? My first paying job was babysitting children. I had taken the babysitting course at the local Y, earned my certificate, and let neighborhood parents know I was available. From there I moved on to a summer in the tobacco fields of the Connecticut River valley. The temperature under the nets was often over 100 degrees. I wore full length pants, a long sleeve shirt, and a wide brimmed hat all in an effort to keep the tar oozing from the tobacco leaves off my skin. After a day in the fields my clothes would be black and sticky as the tar mixed with the dirt of the field. The reward of that miserable summer’s work was a sweet new 10 speed bike, purchased with my saved earnings. Rarely do our first work experiences translate to an adult career. But lessons learned in how to handle money can have influence decades into the future. Not all of my youthful expenditures were as practical as the bike. When our children started earning money, my wife and I wanted to instill greater structure in how our kids used the money they earned. Perhaps, some of our story will help you in guiding your children or grandchildren to handle their own money well.
First of all, we differentiated between earned income and gifts. Monetary gifts from grandparents, aunts, uncles, and others they were allowed to spend as they wished. We had them divide any money they earned into three categories, saving, spending, and giving.
The savings category was broadly for the future. For our children it went toward college expenses. But it could have been used to purchase a first car, start a business, put a down payment on a home purchase, or some other forward-looking expense. The idea is to save to improve the future prospects of the child in some way. We opened a joint savings account at a local bank to keep these funds until they were needed. Fifty percent of all they earned went into the bank.
The spending category was theirs to do with as they pleased, but with some parental guidance. This was an opportunity to teach and ask probing questions about the value of the purchase. We also gave latitude to allow them to make purchases we might not have made. There are still Beanie Babies lying around with the tag attached, because they were going to be worth a fortune someday on the collectables market. Forty percent was the target for this fund.
The final category was giving. We wanted to instill in our children the importance of helping others. There are numerous causes that are worthy of support; local churches, animal welfare groups, organizations fighting a specific disease are all good options. But there are also individual needs that pop up unexpectedly. This fund was the final ten percent.
One of the goals of parenting is raising children that will become well balanced independent adults. Teaching them how to handle money is an important part of this goal.
