Wednesday, June 1, 2016

Impose A Savings Tax On Your Kid’s Spending

Today’s fantastic family finance article is:

Round Up Savings Calculation

How do you get your kids to think about saving when they are spending?

Try a savings tax.

Anytime your kids make a purchase, have them kick in a little savings to a savings jar, account, or card.

How much? Here are 3 options to consider:

  1. Save the change: Round the purchase up to the nearest dollar. Save the difference. For example, $4.20 rounds up to $5.00. The difference — 80 cents — goes to savings.
  2. Match the sales tax: Look for the sales tax line on the receipt. The tax amount goes to savings.
  3. Save a percentage: Agree on a savings tax rate. Multiply the rate by the purchase amount. The result goes to savings. For example, a savings tax of 10% on $4.20 would be 42 cents.

You might even be able to find a banking app that does all that automatically, or at least makes the tiny transfers simple.

A savings tax on your kid’s purchases means more mindful spending and more consistent saving all bundled together. That’s a personal finance two-fer!

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