This year we decided to focus on how to make DOLLARS out of CHANGE. The easiest way, in my opinion, is to start talking to your children about the value of money and teach them to save. My children received a lot of money for the holiday because I implement the one gift per child per person rule. If someone would like to spend more, then they give my children checks, savings bonds, or gift cards to be used later.
This is our formula for success:
1) Cash the checks and get cash (I even get cash for the gift card amounts so he can see how much they are worth)
2) Open a savings account for your child
3) Open a checking account or keep a piggy bank at home
We then sit down with our eldest child and we divide the money he received into several categories:
1) Long term saving only to be touched for college, a car, or a special trip (We have most of this money in CDs or a money market account to insure that it earns the most interest.)
2) Savings for a wanted item (short -term) He wants to go to a baseball game so he is saving for the ticket. Yes, we could buy him the ticket but we are trying to teach him the value of saving. We will most likely buy him the ticket when we go and put his savings into his long- term savings account. You can use the checking account for the short term goal item or use a piggy bank. If you use a piggy bank buy a Vis a Vis (wet erase pen) marker and write the amount in the bank on the outside. Then write the amount needed to buy the special item. Finally, subtract the two amounts so your child can see what they need to earn to make their purchase a reality. We talk about ways to earn the additional money. He decided he wanted to feed the dog everyday for $1 a week. He came up with the fee. I figured that since he is five that $1 seemed reasonable.
3) Finally, take the final 1/3 and let your child pick out something they would like to buy.
Matthew really liked his Santa gift which was a trio set. You read right, only one Santa gift. We celebrate Hanukah and even with the one present per person rule the children had plenty of gifts. We then researched the Trio blocks he wanted and we found them at Toys R Us on sale for buy 2 get 1 free. We determined he could buy two and the third would be a gift for a friend. I would pay for one of the Trio block sets because I am giving it to his friend. He would then buy the other one. He had money left over so it is in an envelop in my purse to be used at another time. I put the value on the outside of the envelope and each time he spends some we subtract the amount. This way he knows what he has left to spend. He often puts stuff back to wait until it is on sale or in case he wants something else.
We are proud of our child. We hope that by teaching him the value of savings and waiting to make large purchases that he learns the value of money. We think our idea is working because he even helped us divide his sister’s money. We let him help determine what she needed. Then we went and deposited the remaining 2/3 in her savings account for a later time.