Teaching Kids About Money
Posted by John Draper | Filed under Kids & Money
When my daughter, Alexandra, was about 9 we were driving along in the car when the radio contest winner was announced for the day. Alexandra and I started chatting about what we’d do if we found ourselves with an extra $1,000. Her first act: to put $100 into her savings container. She was nine years old and had the concept of savings. That’s because she has me for a momma.
Parents often resist taking the steps to educate their children about money. Sometimes it’s fear: kids frequently ask questions grown-ups don’t have answers to. Sometimes it’s based on our history: how we were taught or not taught about money. And sometimes it’s just ‘cos we haven’t thought much about it.
If you do think about it, and if you read some of the research that tries to define why some people deal well with money and others don’t, you’ll see a pattern. The people who seem to have money in perspective and manage it well are those that as children had some money to work with. They also had parents who acted as their guides, setting expectations for how they would use their money. Not controlling them. Not whipping the money away at any small indiscretion. But setting parameters and taking natural opportunities to teach their children the lessons they would need to cope as adults.
As early as five, you can begin to teach that money is a means of exchange. Give your child the change to buy something from a pop machine, operate a payphone to call Grams or to buy a newspaper. Explain that when you pay for something, the machine keeps the money, but you get the pop, call, or newspaper. Give her $1.00 to buy something in a store and point out that money can be used up, so you have to choose carefully so you get what you really want.
Since busy people often run into stores to buy things, it’s easy for kids to learn the lesson, “When we go in a store, we buy something” (in your child’s mind, anything). To counter-act this inappropriate lesson, when you go shopping show your child your list and the money you have to pay for your items. Ask if he has a list and the money to buy the items on his list. If he doesn’t, tell him that he’s just browsing today.
Deferral of gratification is one of the most important money — and life — lessons you can teach your kids. When your child wants to buy a new game or toy, make a chart to help her see how long she has to save. Find a picture of the toy and paste it at the top of the chart. Draw boxes for the number of weeks she will have to save. Staple an envelope to the chart. Then, each week when you give her the money, she’ll put it into the envelope and mark off one of the boxes. Tell her that you can’t always have what you want right away. Sometimes it takes time to save up the money you need.
Want your kids to be smart shoppers? Talk about the fact that sometimes it’s really easy to be attracted to an item because a friend has it, or because it looks great on TV. But you need to think about why you want it, and if it’ll do what you expect, before you buy it. You also need to find ways to pay the least amount possible so you can keep more of your money for the other things you want.
Some of these lessons take time, planning and carefully execution to teach. Others are easy to incorporate into daily life. Safe in your care, your children can try, fail and then try again. They can make the mistakes we all make when we’re learning something new without having to suffer dire consequences. And they can build strong financial habits as they learn the role money should play in their lives, and how to make it work for them instead of the other way around.
July 8, 2008 at 3:59 pm
I have so many friends whose parents constantly bail them out….now their earning good money, they still have nothing left. They, in their late 20’s and 30’s are not as smart as Alexandra!
July 8, 2008 at 8:09 pm
Hi Gail: Another great post as always! It also brings to mind, especially now that it is summer, that not only do we not have to purchase every time we go into a store but that every activity we do with our kids does not have to cost a fortune. Movies at the theatre, mini golf, etc. all cost a small fortune. I am making it a point this summer to find as many fun things as possible to do with my daughter that do not cost anything or cost almost nothing. She is nine and fortunately still wants to spend time with me (well most of the time). So far this is some of what we have come up with:
1. Go to the library. Not only books but videos, magazines, books on CD (great for car trips), etc.
2. Make homemade lemonade (very easy to do) and read the books we got at the library.
3. Go on a picnic.
4. Have a campfire.
5. Dust off the STUFF we already own and use it! My house is full of great stuff that has not been used in a while – board games, sidewalk chalk, sports equipment, craft supplies, the list goes on and on and on.
6. Make homemade dog biscuits. We have a dog but it is also a lot of fun to do it for friends and neighbors. The recipients never complain if they don’t turn out exactly right! Lost of recipes on the internet.
7. Make homemade playdough. If your child is older maybe they would like to do it for a younger child. Lots of recipes on the internet and nobody has to eat it so if it isn’t exactly right it doesn’t matter.
8. Plant a few pots with seeds. My daughter has planted three pots with lettuce, spinach and sage. She loves to check on how they are doing each day. The first day when she was digging in the soil she said “I can’t believe you are letting me do this!”
9. Take a walk. We like to add a little fun to our walks by making a list of things to spot while we are walking. We take about 5 minutes before we leave the house and come up with about 10 things – a dog, a cat, a garbage can, a person riding a bicycle, an airplane, etc. We like to see who can get everything on the list first. This is meant to be fun – not an Olympic competition. We also do the same on car journeys.
10. We are also going to attempt to make a solar cooker. Once again lost of instructions on the internet. Not to make meals with but just to see if we can get it to work. Keeping my fingers crossed on that one!
This list is by no means exhaustive or even very creative but I think is shows that it is possible to have a lot of fun with kids for very little. Maybe some of the activities are easier to do in some areas than others. Being in debt is one thing but being in debt and bored is another! I also think it is important for kids to get away from the T.V., computer and video games as much as possible and for parents and kids to spend lots of time together. I am realizing more and more with my own daughter that children really do grow up way too fast. I think it is nice to do things with them while the still want to be around you. It creates many lovely memories which will last forever.
July 9, 2008 at 5:18 am
Susan: Bravo. What terrific ideas. So often we think we have to spend gobs of money to do things with our kids when, with a little imagination, we can come up with terrific ideas like these. What a smart girl you are. And your daughter is a lucky chick. As for your nine year old wanting to spend time with you, my daughter and I love to spend time together and she’s almost 15. We don’t grouch at each other and I think that’s the key. Who wants to spend time with a grouch.
Hey, y’all. If you have ideas to add to Susan’s list, go ahead. Other people will come by and may be inspired.
gail
July 16, 2008 at 9:32 pm
To both Gail and Susan, I just wanted to say as young adult who had the luck to have a mum like you ladies I KNOW these lessons are some of the best you can teach to set your kids up on for success in life, and are truly appreciated. My twin sister and I will both graduate virtually debt free because my mum saved for our education, even by denying herself things she probably wanted (thanks mom). Though she was lucky enough to afford to save such an amount, the more important gift has been the lesson of how to manage money so that we have a good chance of lifelong financial success. While some friends parents would party on weekends, smoke, vacation without there kids every year, often buying new cars, motorcycles or fancy things for the house even when not needed, my mum was frugal even when she reached the point that she could afford not to be. Overall, the best memories I have in life are the times we spent together as a FAMILY. What I don’t remember is the times I begged for stuff just because my friends had it and my mum said no. What seems important in the moment almost never is, it’s those things you are still thinking about months or years after the fact that truly mean something. My sister and I were watching your show on slice today and it made us stop and think about all this and remember how grateful we are for all the lessons our mother taught us. I know one day I would like to carry on in the same way with my own children as you ladies have. Keep up the good work!
July 8, 2009 at 3:11 pm
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November 18, 2009 at 11:51 pm
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