Kevin Walter

I was pleasantly surprised when my son raised this idea himself. "Dad, I want to save 1/3, invest 1/3 and spend 1/3". I think he was expecting me to reject his idea. Just like the time he decided it was a good job to see if the ice in the pond was thick enough by sending his baby brother out to ice skate. Unlike the pond plan, the savings plan actually had merit. So, we set about a strategy.

1. We set up direct deposit. This eliminated the immediate cash leakage that occurred by cashing his check at the store and plowing half of it right back into merchandise. A great windfall for the store, but not so good for my son's personal financial picture. By setting up direct deposit, his hard earned cash landed safely in a bank account where each transaction could be viewed and he could see exactly what was happening.

2. Next, we investigated the employee stock purchase plan offered by the company. This option allowed my son to take a portion of his monthly check and invest it at a 15% discounted premium in the ESPP. Normally, I'm not a big fan of tying your financial future so tightly to one organization, but in the case of a sixteen year old learning how to save, it's a great option.

3. We established an automatic transfer from savings to checking to give him an option to draw cash when he needed it. This had the same added benefit as direct deposit in that my son could see each and every transaction and where and how he was spending his money.

So, what are the results? After being on the plan for another two months, my son has saved $36 in his savings account, has purchased 25 shares of his company's stock at an average price of $23/share), but most importantly, this month we moved $300 to a six month CD in his name. That's a grand total of $911 in savings in the first two months alone! That's a huge accomplishment.

And guess what, he still has enough money to go out with his friends and live a normal sixteen year old lifestyle. Gone are the impulse buys: the expensive video game controllers, ring tones and eating out after work every night. But, you know what? It hasn't killed him!

http://www.thatmoney.com/readarticle.asp?id=156&page=1