As some of you know, I make my kids save part of their allowance. They are paid every four weeks. Of their allowances, they must allocate 20% to long term savings. This works out to $4 for Rose and $3 for Tobias.

Of the amount they put into long term savings, I will match them 25%. If they want to put in more than 20% of their allowance I will continue to match them up to $8 (so I'd put in 25 cents for every dollar saved up to $8, the most they can get each month from matching is $2).

I have done this so that they have an idea right from the start of their earnings what a 401K does and how it works and to get them used to always contributing to one. I've explained a bit how it works in the real world and that Daddy's work has a 401K that matches 50 percent up to 6%. The only comment I got on that was could I match theirs up to 50 percent. Umm...no. Why not? Because in the real world the employer makes that decision, they don't. They seemed okay with that awnser.

Rose does not save anymore than the $4 that I make her save. Tobias saves the $3 I make him save plus $1 more so that his savings account can be equal to his sister's.

So far neither of them has wanted to save more than $4 despite the Mommy Match. They are not yet ready to max out. It has been fun watching them accumulate the extra money, but neither one of them have cottoned on to the fact that they could be earning more by saving more. Or else they aren't willing to give up any more of their spendable income to their Kiddie 401K program.

Sounds like some grown-ups I know, LOL. It is certainly a fun experiment. This savings account is untouchable until they are 18. They can then use it to pay towards college or a wedding or a car or a house downpayment or maybe open a retirement account when they are working a real job. So its not necessarily a true retirement account, it just works like one until they can access it.

Not much in it yet, it's only been half a year or so they've been getting an allowance but its the lesson, and the principle of it that I want them to learn.