A few months ago, around my son’s birthday, I tried to teach my son a financial lesson about savings. Unfortunately, it was foiled by birthday money that he received.
For the past few years, my son was spending a lot of his allowance money on pokemon cards. A few times he got disappointed because he wouldn’t have enough money to buy other things like Nintendo DS games, Legos and the like… Of course, I would explain to him why he should save his money, but when we would talk about the interest gaining aspects, he never quite grasped the idea or at least he didn’t until a few weeks ago.
You see, my son has converted from an impulsive spender to a thoughtful saver! While I’m not entirely sure what brought out this change other than the example that my wife and I set, I’m impressed!
So yesterday, I decided to try to explained the financial lesson on savings again. I pointed out how the interest gains can work with his saving dollars. He understood the idea of interest this time around, especially the geometric (also called exponential) growth aspect. When it’s my daughter’s time to learn this lesson, I think I’ll create a “what if analysis” spreadsheet as a fun interactive visual to the lesson!
My Son The Budget User?
My son created a type of budget journal! It actually more like a checkbook balancing kind of journal, but he created it by without any help from adults!
The most important thing is showing encouragement for both this new activity, “Savings“, and the newly created system that my son created to help accomplish his new savings habit!
I created excel process to help me with my finances all the time. Do you use spreadsheets or other such document to give you a leg up on finances or other decision-making processes?
-MR
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Usually I just do the interest equation…
But for the mortgage I’ve been playing with the GRS amortization spreadsheet. It is very motivating.
I loved the spreadsheet that I used for paying off my mortgage early. I created it in excel (and later used it in Openoffice) and it had an actual page, and a “what if” page where I could change the amount extra paid on it.
The speadsheet would then calculate the year cut off of the loan, and the total interest saved.
It almost made paying off debt fun 🙂
I had an excel spreadsheet too. I had an amortization table that I would put the payment dates on…so when I made a big lump sump payment, I could say..that just eliminated 6 more months of payments. It was very motivating for me.
Me too! Now that I’m at a faster site, I’ll have to clear up my amortization spreadsheet and put it up on my website!
I had 2 spreadsheet page, one that recorded the here and now, and another page that was a what-if analysis page. That what-if was great!
I blogged about the spreadsheet here!
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You are doing such a good job with those kids of your MR. They will be mini trumps one day. (Or Mini Money Reasons…) 🙂
Thanks! (lol)…
Yeah, it was one of those proud dad moments where I had to blog about it! Hopefully, he’ll read this blog someday and realize how proud I am of him! 🙂
My daughter is very noteworthy too, but I’m going to way until she’s a little old…
Kudos to you for training the next generation of financially savvy adults. To answer your question, I personally use a combination: Excel, financial calculators, and Java investment calculators.
Wow Roshawn!
That sounds like a winning trio of applications! I wish everybody were as up on their finances as we are… It’s almost make paying off debt exciting.
I like to use financial milestones to add a bit a excitement to the process.
That’s really impressive. Maybe the reason he’s “getting” it now is that he’s maturing, or developmentally ready for the idea of interest. One minute a concept is “over their heads” and the next they all of a sudden grasp it. That’s what I love about teaching!
You are probably right! And since he’s the closest to a spender in the family, I think he realizes to a degree, that he’s not following suite.
Of course, I didn’t push the matter, I’d rather him realize that spending on junk now is not the best path. I was pleased to see he learned the lesson quickly… I would have hated to try to reign him in…
You probable see this kind of stuff all the time as a teacher! But for me it’s more exciting that words can tell 😉
I’m so glad the lesson took hold in his brain! I remember showing my little sisters how to add their deposits into the little journals they kept of their running total bank balances…it was so cute. 🙂
Thanks Crystal! Me too.
I’ve taken him to the bank in the past, and I think he just went through the motions… But now I think it would sink in 🙂
excel has to be one of the most powerful programs ever made – now if only people realized its full potential and used it. i do not use any paid software to manage finances. i have 1 excel spreadsheet with multiple tabs that are interlinked. i spend 2 hours every quarter (8 hours per year) on my finances as 99% of it is on auto pilot. my spreadsheet allows me to get a snapshot of any aspect of the balance sheet at any time with just one glance.
I’ve noticed my students come in knowing less and less excel than they used to. I’m not sure if it’s no child left behind or what.
I love spreadsheet programs too! I know excel the best, but I use OpenOffice too. It’s as a great program and it’s free!!! Lately I started using Google’s online spreadsheet program also.
You budget system sounds a lot like my automated budgeting system. Click to link to read about it!
How old is your son now? Mine is 5 and understands counting, but I’m wondering if it’s a little early yet. I mean, he puts money in his bank but doesn’t have an allowance or any of that stuff yet.
My son is 10 years old, and my daughter is 6 years old.
It kind of depends on the kids. From what I hear second born children pick it up faster because of their older siblings. I blogged about their allowances here!
I think 5 is good, at the minimum, you can put it all in savings until they are ready… If they do have a aptitude with it, I split the money up a few ways with some of it going to savings, spending and tithing!
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