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Plan Well, Retire Well

Saving and investing your money

Kids Need to Practice Spending Money

How can you learn to manage money if you never have a chance to practice? I believe kids --from preschool on up -- need opportunities to practice spending money. They need a chance to make choices and learn from their choices (and mistakes).

Summer is a great time for kids to practice spending money. For one thing, they have all this free time to think of things they want! Of course, to spend money you have to have money. And that brings us to the concept of earning money.

Every summer I have created an "extra jobs" list of things I'd like to have done around the house. Each of these jobs has a dollar value -- from a quarter when they kids were young to several hundred dollars now that I have big teenagers with real muscles and skills. I think these need to be real jobs -- not make work -- for kids to really buy into the concept that what they do has value.

To introduce older kids to concepts of compounding interest and saving money, check out the Plan Well, Retire Well: Your how-to guide website. Online calculators are a fun way to set financial goals.

For example, perhaps your child has a goal like Jamie's:

"Jamie has a part-time job and makes $80 a month. Jamie would like to go with a school group to Florida, but it costs $350. Jamie has 12 months to save the money. This is what Jamie spends money on each month: food, $20; movies, $20, CDs, $30, and school and sport supplies, $10. How can Jamie adjust her spending so that she can go on the trip?"

Use the Plan Well, Retire Well calculator "What's It Worth to Reduce My Spending?" under the section "Dollars from Dimes" to develop a plan. Is there something your teenager would like to have or do in the next year? Here is an opportunity to practice skills that will make a difference throughout their life.

A worksheet is available to help guide teenagers through the website's first two sections. The free worksheet, "Take Time to Save Now", is available for download.

How do you encourage kids to make and spend money? What has worked for your family? Lets use this forum to share ideas! Click on my name below to send in your ideas.

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