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For many parents, thinking of childhood savings may inspire visions of a smashed pink porcelain pig. But for kids looking to save today, there’s a new pig in town, it’s into asset allocation and it’s aiming for your 5- to 8-year-old.

The Money Savvy Pig is a piggy bank with four chambers, each with a different purpose. One is used to capture spending money, another for saving, one for donations and, finally, one for investment.

Think your kindergartener is too young for such an advanced savings strategy? Not so, according to Susan Beacham, inventor of the Money Savvy Pig. She says that although rebellious tweens and teens gradually listen less to their parents and more to their friends, especially when it comes to shopping, toddlers and younger children are eager for approval, which makes this age the perfect time to teach the basics of personal finance.

Starting Early
“We begin to teach children about money in middle school, when they learn decimal points and percentages, and in high school we are no longer a voice of reason for them,” says Beacham.

But kids are actually very receptive to money lessons at an early age, says Beacham, chief executive and founder of Money Savvy Generation, a company devoted to “helping kids get smart about money.” 

“Parents think children aren’t sophisticated enough to handle" budgeting, but it’s just that their brains can’t handle the abstract concepts, says Beacham.  If they see coins adding up, and compartments used to save for specific purchases, they can set goals and see the progress they make in their savings.

Using compartments sectioned off like cuts of meat, the Money Savvy Pig introduces your child to the idea of short-term and long-term savings goals with these four sections:

Spend: The spending compartment is up front, because “a child isn’t going to trust what you tell them when you say you can’t spend money,” Beacham says.  The proceeds from this compartment can be used for small toys, candy, movie tickets and other inexpensive items.

Save: This compartment is for short-term savings goals for purchases within the next year. For example, a Nintendo DS game console might take several months to save for.

Donate: The company has sold 800,000 pigs since the company’s inception in 2002. One of the reasons this little piggy has become so popular is because of the “donate” slot, Beacham says. “Giving is instinctual to very young children. They believe they can solve the problems in the world. I wanted to put some foundation under that instinct.”  Children can choose a cause and a charity. When they save a certain amount, you can write a check for that amount and mail your child’s donation.

Invest: Whether they’re thinking about buying a car or paying for college, this compartment is meant for purchases your child is planning for as much as ten years from now.  Of course, this section might have to be emptied and socked away in a savings account when substantial amounts accrue.

To create an image for each savings goal, the pig comes with a sticker sheet with 20 pictures (a hamburger, a graduation cap, a car, etc), as well as blank stickers for kids to draw in their own aspirations.

Beacham, who worked in the financial services industry before starting her company, says no compartment in the Money Savvy Pig are designed to be larger than the others, and your child can decide how much to allocate to each compartment.

Learning Patience
When we take out a credit card to pay for a purchase, “It looks to a child that we’re doing it without any thought process,” Beacham says.  But an important money lesson for children early on is how to delay gratification and control impulses, she says.

And in this economy, now is an especially good time to teach young children about smart spending and saving, because they’re hearing at school and in the news about people losing their jobs or moving away, Beacham says.

“Parents have an opportunity to reach their children because they’re listening better than they were before. We’re spending less, saving more and modeling the behavior that they’re listening to,” Beacham says.

And if your child thinks he’s too grown-up for a pig in red, blue, pink, green, purple or chrome, there’s a Money Savvy Football for “fiscal fitness training,” and even a cow for households that keep kosher.

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