Sep 3, 2010
The 10/50/40 System (Merrick)
As long as we're talking about teaching finances to your children, let me tell you a little about what my parents taught me. From several of your comments, it sounds like your parents taught you similarly.
We did the 10/50/40 system:
10% to church tithing
50% into savings
40% for personal spending
Every dollar from babysitting, working at Dad's office, and lemonade stands was divvied up this way.
It's not quite as cut and dry anymore, but as adults, we still try to think in the same way. For us, 10% tithing always comes first, and after that we pay all our bills. Once that is done, I have budgets for groceries and gas, and then try to save 100% of the remaining money. Obviously that doesn't always happen, but that's the goal.
Although I no longer follow the 10/50/40 system meticulously, I fully intend to pass along this system to my children. I think it's a great and very simple way to help your children understand the importance of saving. Especially because that college savings fund could easily be blown on candy if you don't teach them how to save.
What are your saving/spending systems, and what you do currently (or plan to) teach your children?