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May 14, 2009

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At those ages, I think you should take the time to make it a teaching moment. Splitting up the money so that they get some to spend, and some to save. If you are a church person, you can even talk to them about tithing. Let them learn about saving money for something they REALLY want. They are at the age where starting to teach them about money is important. Also start them on a chore chart where they will get paid for certain jobs around the house. This begins to instill the idea of working for money and also gives them opportunities to save and spend money.

This is a great opportunity to teach the children money skills. With everything, they should save a portion, give a portion and be aloud to spend a portion.

teach the children about why they might want to save the money and then let them make the final choice

We have had a policy since the kids were 5 that they save 50% in a savings account, and the rest they can spend on whatever they like. Our opinion is that they need to get used to saving, but they need to get used to spending as well.

The 50% that they spend is usually more than their allowance, and they've been working out that 20c a day saved from their allowances is a dollar a week, and that can add up to bigger amounts over time.

As the eldest has moved from primary school to high school, the price of food has changed, and he has been educating his little sister on 'inflation' LOL

While it is important to teach children about money, a gift is a gift - theirs to spend how they choose. It's hard to teach lessons of ownership and responsibility if we tell our children exactly what they have to do all the time. Besides, spending their money is just as much a lesson as putting it into a savings account - once it's gone, it's gone. I agree with Carrie's comment - you can teach about money habits but let your children have the final choice. Sometimes spending "mistakes" are lessons in themselves.

If your other half gets a gift of money, what does he do with it? Does he put it in the bank to cover future bills, or consider it a windfall, something to spend on what he chooses?

i would let them spend it entirely. Their "savings" should come from their salary (allowance) so that small windfalls like this are a reward for having been so good. otherwise, if the savings come from windfalls, it would be too tempting to not save out of your regular income. you might start thinking, that, "well, I can not save out of this allowance/salary cuz i usually get money from grandpa (think Christmas bonus). I'll just pay myself back from the windfall."

You have to live sometimes. I'm going to let windfalls be their pressure valve. I think that if you save properly from your regular money, you don't need to save from your windfalls. Granted, if grandpa gave $1000, that would be different.

Let them spend and see how it goes. If you think they are not doing it right, you could guide them, if you see that they are doing it right, you could encourage them. But, without allowing them to use it, you would never know how it goes.

I like the way Carrie (comment #3) put it. Make this a teaching moment but ultimately let them make the decision. If Grandpa or Uncle Henry or Aunt Sue gave them a bike, would you take the wheels off and sell them so half the value could be "saved"?

It's a great opportunity to teach them about money when they actually have it in their hands. We always allowed our kids to spend some of their gift money, provided they also put something in the bank. Hopefully, the advice sticks when they're out on their own.

I believe no child should be forced to save or give a portion of the money that was a GIFT to them. You are right, that is what allowance is for. However, you should still use this as a teaching opportunity. Let them buy what they want with the gift, but teach them about benefits of saving (they can buy something bigger later), compound interest, etc.

Hmmmmm...the money is a GIFT. I think you need to also take the wishes of the giver into consideration. Is it their grandfather's intent for them to buy something they really want or to put the money into a savings account? I suspect that he wants them to pick out something that they would like verses savings. He could have always given them a savings bond if that was his intent.

I also have another issue with your question. You are their mother. Why does your boyfriend even have a say in how your children spend their money? He is not their father or even a stepfather. It is really not his place to have an opinion.

You have plenty of opportunities to teach your children about savings. Let them enjoy their gift. Not everything needs to be a teaching opportunity.

Since it's a gift, I really think the child should be able to do what he wants with it.

I believe that kids really can learn to save by themselves and don't necessarily need to be forced to put money into a savings account. For example, what if the child goes to the store and sees a great $40 toy that he wants? He'll learn that in order to get what he wants, he'll have to save his $35 and wait until he earns $5 more. Eventually a child will want to purchase something that costs more than he has, I think that this is where the most valuable savings lessons come from.

I have a 4yr old and this is what we have done since his 3rd birthday/X-mas. While opening gifts, we pull aside the ones with gift receipts. When he is done, we let him decide what he wants to return. With the "store credit", we let him buy whatever he can afford. He loves store credit and beams when he hands over the gift card and says he is paying. As far as cash, we put a couple bucks worth of change into his piggy bank and bank the rest. Through out the process, we document the returns and who gave the gifts. After the purchase, we can tell him so-and-so gave you the money to buy that toy. So when so-and-so asks how he liked the gift, he always tells them he plays with their stuff all the time. The bonus is he plays with everything and sometimes he has enough store credit for the next trip.

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