Pay yourself first!

There are numerous approaches to teaching your children the importance of money and how to save.

How do you begin? What are the important categories to consider? 

Given these “complex” questions, what then is a good age to start our children on the path to financial management?  How do we teach our children something that even you and I as adults struggle with?  Something which even governments sometimes struggle with?

Remember the tracking of where each cent goes? Of painfully holding back just so we do not “burst” our budget? So that  we can set aside an amount for our savings?  Yes, we’ve been told that it is difficult in the beginning; that it takes 30 days to cultivate a habit.  And yet, the answer is that it does not have to be a struggle at all.

The solution? Simply “pay yourself first”.  Make it automatic.  No struggles with “budgets” and with watching your spending (although this will fall into place later).  This simple advice was doled out in the 1920s by George S Clason, in a book called The Richest Man in Babylon.

The beauty of this method is that our children soon learn that it does not have to be a struggle when managing one’s finances.  It actually is very easy… and something we as adults can even learn to do! 

My daughter Elise, for example, has three jars; one each for “spending”, “saving” and “giving” respectively.  When she receives her allowance, she knows that 10% would go to each of the jars.  This means she is free to spend the remaining 70%. No planning, no tracking, no pain!  And yet, she will have her savings, her money for helping other people and the money she can use when she goes shopping.