Giving
Kids Incentives to Save
Goals can be powerful motivators, but kids often need
a little extra nudging to keep on track. They are likely
to veer off their saving program here or there, from various
temptations to spend on a new CD, latest fashion or fad.
That's okay, but you can help keep them closer to their
saving program by:
a)
reminding them how much spending now on a whim will
set them back from their goal. What does that mean in
dollars and time? But don't push; this is all a learning
experience. The more you try to control their actions
(up to a point), the less they are bound to learn.
b)
sweetening the pot with some saving incentives.
If you feel your child's
goal is particularly constructive and worthy, you can
offer to kick in a certain amount. You can double the
interest rate at the bank's where they deposit their
cash or you can offer them a challenge grant (once they
save up half, you'll contribute the other half - or
however much you're willing to shell out).
Or you can set up a matching
grant, matching their deposits either dollar for dollar
or whatever amount you feel inspired and able to contribute.
But you should set a few rules to make this technique
most effective:
1.
If your child decides to withdraw some money to purchase
something else, you stop matching contributions until
he replaces that amount (that way, you're not always
putting in; he's not always taking out - at least not
without consequences).
2. Keep careful track (or
if your child is old enough, have him keep track) of
inflows and outflows. The table below shows how this
can work.
Setting
Up a Matching Grant
|
Date
|
Child's
Deposit
|
Parent's
Match
|
Withdrawals
|
Repayment
Balance
|
Total
|
|
1/1
|
$10
|
$10
|
-
|
-
|
$20
|
|
1/28
|
$5
|
$5
|
-
|
-
|
$30
|
|
2/10
|
-
|
-
|
$12
|
$12
|
$18
|
|
2/25
|
$4
|
-
|
-
|
$8
|
$22
|
|
3/15
|
$10
|
$2
|
-
|
-
|
$34
|
|
