My Child, The Tycoon

Would you like to teach your child to build his very own nest egg? You can start securing your child’s wise use of money: teaching savings and exercising his math skills.

Teaching money saving techniques to children may seem far removed from the parental focus, but failing to teach money value and saving early can lead to problems in early adulthood.

Elementary School

Many parents start giving allowances to children when they begin school. Some allowance conditions are attendance, chores and/or homework completion. While a six-year-old may not understand the value of a dollar, he completely understands the concept of something being his.

When you give a child money, teach him to save a portion of it for later. This becomes a habit, just like brushing his teeth. As he gets older, he will have better control over his money. Put the saved portion into a savings account to draw interest.

Exercise his newly-learned addition and subtraction skills to advance his saving power. Offer incentives, like awarding ten dollars for every hundred he saves.

Keep the purse strings tight on the account. Leave his savings untouched to show him the value of interest and how saving money is as important as making money.

Middle School

By twelve, your child grasps the concept of spending money and may have mastered making money. Now is the perfect time to set savings goals. Whether you child is looking to spend on a car, sports trip or college, help him set attainable goals.

Middle school is the perfect time to add ten per cent of birthday and holiday money to the savings account. While this money is generally earmarked for child’s discretionary fund, teaching saving of gift money translates to future saving of tax refunds.

Put those multiplication tables to the test. Show him how a dividend is calculated. If in doubt, let your banker show him.


Time for a budget. Give your child a finite amount you have allocated for back-to-school shopping. Let him calculate what has to be spent on essentials (notebooks, pencils, 427 orange pocket folders, with brads) and what is available to spend on clothes.

Explain how many pairs of pants and shoes he will need. Let him determine whether designer jeans are in the budget when he can get four pairs for the same price.

By explaining the power of budgeting, he may be able to save some of the back-to-school money for his savings account. This lesson will travel far when it comes to buying a car, a home and other large ticket items.

When teens learn budgeting, they learn to spend money in hand rather than using credit. This lesson will help your child keep his credit score clean.

High School

One out of every five American teenagers has a job. Open an individual retirement account (IRA) for him. If you can afford it, offer to match him dollar-for-dollar when he contributes to it.

If he needs convincing retirement is not an eternity away, let a banker (or you can do it) show him how much $500 invested now will be at age 65 at eight per cent interest. Chances are he will jump at the prospect.

By teaching responsible savings and spending early, you child can have a healthy view of a penny saved is a penny earned, a sizable nest egg and a clean credit slate.


How are your children saving money? Do you help them with contributions, support or encouragement? Share a saving money success story.


(c) Ann Marie Dwyer 2008-2011
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  1. An excellent posting Red 🙂
    Keep warm it’s getting colder,
    well it is here in the UK 🙂

    Androgoth XXX

    • In a sleeveless sweater! It is December and I feel compelled to wear a sweater, but it is not nearly cold enough to justify bundling up yet. One of the joys of such temperate weather. Stay warm! Red.

  2. awarewriter

     /  December 6, 2011

    Sara Ann has over $1,000 saved and she just turned 12.

    I wish I had all the nickels I dropped into pinball machines when I was a paper boy. I always had some kind of job from the time I was 12 years old and once I did, I bought all my own clothes. I ‘needed’ a new pair of engineer boots one winter so when it snowed, I grabbed the shovel and earned enough to buy a pair.

    I recall a lovely summer evening when I was in high school. I sat in the kitchen with mom, my tips (I was delivering groceries on my bike when I worked at a little grocery story) spread out on the table. We split the take so mom could buy groceries. I never did save much back then.


    • I did a lot of saving when I was young. Perhaps, I will share the story of where I learned saving on the Saturday Evening Post. I love to tell it 😉 Red.

  3. So, what is different about 2011 than 1971? That was the year I graduated from medical school. Then my father’s rule was if you get married you pay the bills I am no longer responsible. He actually meant what he said and I was madly in love, so I solved the problem.
    Today life is so different. Our children educated to the hilt and hard working with serious work ethics cannot make ends meet because it takes one spouse working full time to pay child support and taxes. What does this do to the American family but destroy it. Instead of having mothers that stay home (or fathers) one spouse must work to pay the costs of excess taxes on the middle class and for day care costs. It seems that we are falling deeper into a big hole
    with no way out.the government has spent our grandchildrens legacy and our great grand children will continue to pay the interest. I hope the rules change back soon. I want to recognize my homeland again before I die.

    • Ted, as you will read through the Emergency Funds series, more people are moving to the model of saving at home long before investing. My children save money all year for the things they want. However, most all of the money they save (which is discretionary for them) is spent on gifts for others (birthday, anniversary, wedding and holidays). It is sometimes very difficult for families to make ends meet. That is precisely why teaching children to save before they get to the big, bad world makes a large impact on how they will be able to live in the adult world.

      Thank you for stopping in to comment, Red.

  4. bear

     /  December 8, 2011

    It is important to teach your children matters of money. When to spend when not to how to save. I tried hard to instill that in in my children, but alas it has fallen on deaf ears. I saw a pattern change when they entered the teenage years and no matter what I did and showed them actual numbers, they still for some reason forgot or ignored what I had taught them. I still dont get it. Only 1 of my 5 knows the value of a dollar and how to manage money. Heres a thought which would you rather take a million dollars in 1 lump sum or a penny doubled for 30 days. This if you didn’t already know will add up to $21,474,836.48 Wow A penny saved is a penney earned. Good article Red

    • I love the riddle! I know the lessons of money are always best taught first hand. Perhaps, we should explore some of the methods available for teaching just such lessons. Thank you for another post idea, Bear. 😉 Red.

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