With the holidays over, the budget in tatters and allowances long since spent, it’s a great time to get the family together to talk about money management.
A key part of this family project is teaching children how to budget because that skill reduces stress later, for both parents and offspring. The lesson can begin by starting an allowance for your children, suggests financial adviser Diane Kimura.
In 1960, Kimura’s father started her with an allowance of $5 a week, saying she had to save half of it. She could spend the other half, he told her, but she had to wait until she had accumulated $100.
Kimura remembers how she’d go to her bank every week and faithfully deposit her money.
When she reached $100, her father said they should celebrate. But Kimura was an unusual child: Instead of celebrating with a shopping trip, she celebrated by setting another savings goal: $5,000.
That simple beginning has set a pattern for her entire life. “I made savings a priority early in life,” she says. “My goal is to be spartan.”
Kimura suggests that families sit together to talk about finances. The children can ask questions and the family can refine goals and values, and look at rebalancing financial and other commitments.
“Teach your kids to be financially independent,” she says. “Always buying them stuff handicaps them. Kids should have skin in the game.”