Kid Finance: Money Teachings And A Dad’s Bleating

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As part of Financial Literacy Month (#FLM2018), I’m featuring guest posts and interviews on the topic all month-long. Please welcome Carl, from 1500 Days to discuss kids and money.

My youngest daughter is afraid of money, at least in the form of coins. If she notices a quarter on the ground, she’ll go out of her way to keep a safe distance. I’m not sure where this irrational fear comes from (Not me! I love money!), but she won’t go near buttons either. We had to ask her school to make an exception to the dress code because she won’t go near a shirt with buttons. She is not a fan of small, round objects.

My older daughter loves money. She has piggy dinosaur banks that she stores it in:

money

And once Older Daughter has money, she’s incredibly careful about spending it. We give her free will to spend her money on whatever she wants; she earned it after all. However, more often than not, she’ll go home from the store empty-handed. Older Daughter has always been this way.

Money fearing Younger Daughter isn’t the same. If she has dollars (No coins!), she’ll spend freely.

I think that my wife and I have done a good job of raising them equally, but that doesn’t mean that they’ll grow up with the same values. We nurture them the same, but nature has its say too. Our children are vastly different people.

money

I want my daughters to be many things, but this post is about money, so let’s focus on that. Instilling good financial values in children isn’t easy.

How should I go about teaching them about money?

When is a good time to start?

What is the public school’s responsibility in financial education?

How do you teach an 8-year-old that saving is important?

How do I get through to my girls’ different personalities?

Before I get to that, let’s take a trip down memory lane.

Child Me

Older Daughter and I are very similar deep down. I was the reserved kid. I was also the saver. When I was 14, I started my first job. I enjoyed going to the bank and putting the money away. I liked watching it grow. I thought it was more fun to have the money for a future purchase than to spend it. Potential energy is more fun than kinetic energy. I would think long and hard before purchasing anything, especially a big ticket item.

My siblings were different. They didn’t save the same way I did. They even came up with a nickname for me:

Mr. Cheapo

The conversation would usually go like this:

  • Sister #1: Why don’t you just buy the stereo?
  • Me: Maybe, but $200 is a lot of money.
  • Sister #1: But you have it. Just buy it.
  • Me: Maybe later.

It was at this time that sister #2 would join in with a chorus of:

Mr. Cheapo! Mr. Cheapo! Mr. Cheapo! Mr. Cheapo! Mr. Cheapo!

Even back then, I don’t think it bothered me. It was a badge of honor. I have money and you don’t. Who has the problem here?

Fast forward 25 years. I’m doing well financially. Meanwhile, one sister struggles while the other is doing average. We were brought up by the same parents but ended up treating money much differently. Is this what will happen to my girls?

How I Teach My Girls About Money

Where do I start? Who should teach children about money? What is the role of the school? Parents? Extended family?

School says “No.”

I was curious to learn what the state of financial education was at my children’s’ school. I talked to one of the administrators a while ago and the conversation went like this:

  • Me: What does the school do for financial education?
  • Admin: We have Junior Achievement come in to give an afternoon session.
  • Me: Cool! I’m familiar with that organization and I like it. How often does that happen?
  • Admin: Typically one day per year.
  • Me: What else do you do?
  • Admin: That’s all.
  • Me: I don’t think that’s enough. What could be done to get more education in the school?

This devolved into a conversation about the school’s mission. The admin explained that personal finance isn’t part of the school’s “Core Knowledge Curriculum” and getting that changed would be difficult. I like my children’s school, but I think that they’re not right here.

What I Teach My Children About Money

My kids know our net worth. I told our children that we are worth $2,000,000. Because they are too young to understand that, I try to tell them in ways they can understand. I let them know that we have the financial resources to pretty much do whatever we want. Sometimes, this leads to complaints from younger daughter:

I know you have the money. Why can’t we just buy it?

To this, I tell them that we spend mindfully. If something is important to us, we buy it. However, we shouldn’t just spend the money because we have it.

There are no handouts. If one of our daughters wants something, they must earn the money by doing chores around the house. When they do go to buy something, I’ll chime in:

That toy costs $10. You had to work 5 hours to earn that money. Is it worth that much to you?

I tell my daughters about the hard work it took to get the money. I remind them that mom and I both went to school and then worked very hard for a long time to earn the money.

I let them know that we bought an unconventional (and good) life with our money. Both girls know that most people my age have to work. I explain that because we saved and invested, we no longer have to work. I tell them how this changed our lives:

  • I get to walk with them to school every day.
  • I get to attend all of their events.
  • I get to have lunch with them.
  • I get to spend the summers and other breaks with them.

Finally, I teach them the mechanics of money. I tell them that if you save and invest, your money turns into more money. You can either have $10 today or $100 later.

Does any of this work?

How much of it sinks in? Am I bleating to an uninterested audience? I’m not sure.

Older Daughter is a master at delayed gratification. She’d wait a week for two marshmallows instead of having one now.

Younger Daughter takes much of it in stride. She’s not the same as Older Daughter, but that’s OK.

Some of it doesn’t register with either of them. You’d be right for calling me a fool for trying to teach an 8-year-old about compound interest. That lesson goes right over her head. I don’t think the 11-year-old grasps it either. They both will someday though and I’m planting the seeds now.

And there is a lesson more important than all of this. It’s about money and not about money all at the same time. The lesson is this:

Good money habits come naturally if you’re living life right.

It’s Really About Life

I don’t argue with people much anymore about money, but when I do, it usually takes the form of deprivation. A friend will say something like:

Why not treat yourself?

You deserve it!

I wouldn’t want to live your life.

The paradox is that while we don’t spend a ton of money, we live a luxurious life:

  • At 1800 square feet, we don’t have a huge home (by American standards anyway), but it’s in a nice part of town that allows us to walk to school, parks, and downtown.
  • We have old cars, but they are reliable and have served us well. They are also paid off.
  • We have good friends in our lives. On the weekends, we enjoy each other’s company playing board games or hanging out in a backyard.
  • We get to travel extensively. We’re thankful to have friends to stay with, so the cost of travel is minimal.
  • We live in a community with a good culture and solid resources. The library is great. So is the recreation center.

Our life is pretty great. We don’t need anything else. It’s all fine just as it is and doesn’t cost a lot of money to maintain. It just so happens that a good life doesn’t have to be an expensive life.

I want to teach my children about money and finance. More than that, I want to teach them how to live. Once you figure that out, the rest falls into place.

15 thoughts on “Kid Finance: Money Teachings And A Dad’s Bleating”

  1. Thanks for sharing, Mr. Cheapo. 🙂 I have certainly seen different money personalities with my three children, although they all have received the same lessons and teaching from my wife and me. I agree to teach kids how to live, be good citizens, and things like money will fall into place. You and your wife are leading by example too, which is a big factor in the outcome of our children.

    • And thanks for having me!

      Teaching personal finance is a funny thing. I thought it would be easy, but not so much. Perhaps I’m expecting too much from young children?

      One thing that I didn’t mention is the peer pressure. In 4th grade, some of the kids have phones. So, I’ve received this question about 9,386 times: “Dad, can I have a phone?” No! No!! NO!!!

      • We experienced it too. We held out until middle school for phones. If you hear our kids tell the story they were the last three kids on earth to get phones. 🙂

  2. Still to early to see how my kids will break at five and three. Still my oldest has asked about retirement a few times given my mom is going there soon. I remain hopeful.

  3. You are definitely reaping the rewards of early financial wisdom! What a gift for you (and your girls) to be able to walk them to school and have lunch with them every day. To most of us, that sounds like a dream.It is very true that different children in the same family will absorb the money lessons imparted by parents – both intentionally and unintentionally – in very different ways. I wonder if your struggling sister might end up being equipped to teach her nieces a thing or two about what to avoid with money management and why. (She’d have to be at a place where she acknowledges her mistakes though – and that’s not necessarily the case.)

    • “To most of us, that sounds like a dream.”

      Thanks for pointing this out! You’re completely right, but I’ve taken it for granted lately which isn’t cool. Life is good. 🙂

      I don’t think Struggling Sister has wrapped her mind around money yet. She has a good heart, but…

  4. My son is 12.5 and we talk openly about money and I let him read my blog. He appears to have taken after my wife in that he’s more of a natural-born saver than I ever was. Still, there are temptations. Downloadable books and video games are among the hardest to resist. With just the click of a button he could be reading that book or playing that video game. I didn’t grow up with that kind of temptation but I’m sure resistance would’ve been futile.

    He recently shared that he was struggling with decision. He really wanted to buy a video game, but it cost $60. I suggested he sleep on it. He agreed that was a good idea. I haven’t heard anything about that game since.

    One troublesome trend is that he seems to like to spend money on food treats and candy. My secret for curbing this behavior was to tell him that buying candy was essentially turning money into poop. That got him thinking.

    • “…buying candy was essentially turning money into poop.”

      Haha! I’ve never heard that argument, but you can’t argue with it! I’m going to try this on my girls!

      You son sounds like a thoughtful kid and you’re teaching him well. Keep it up.

  5. I have slowly started to teach my daughter about money with many of the same conversations above. One thing that we did was gave her multiple piggy banks. She has one for college, one for a car, one for savings, one for spending and one for donations. Whenever she receives moneys she divides it up between the banks, but can never put it all in one. She recently wanted to go shopping at a local office supply store to stock up on pencils, paper, paper clips, etc. She brought $11, from her savings bank and a pad. I asked her what she planned to do with the pad and she told me she was going to track her spending in the store. As she put something in the basket she subtracted the cost from her $11. This was awesome, her first “checkbook balance”. Mind you she only spent ~$6, but it was great seeing her do this.

  6. You conveniently forgot to mention the NSX at the end there. 🙂
    It’s so interesting to see how different your two daughters think about money. Everyone is an individual.
    Our kid is pretty good with money. We are trying to teach him to delay gratification and it’s working okay. He likes money and hoard it, but not as bad as my wife when she was a kid. We’ll keep working on it. Kids are great. Our school really need to spend more time on personal finance. Leaving it all to the parent isn’t a good idea.

    • I thought of that! 🙂 The NSX is an old car and is paid off! 🙂

      But yeah, that is my one asterisk. And Asterisk is also the car’s name:

      I’m a frugal* guy!

      I crack myself up.

  7. Have you tried showing them via cells in excel (graph or just the numbers growing year by year)? My family didn’t ever talk about money but I knew we invested in real estate and that it generated more money over time. I was vaguely familiar with it when my high school math teacher did a “life lesson” about credit card interest.

    We also had stock picking in elementary school. But it was a few weeks and that lesson never stuck.

    But I feel like if people in my life had talked about it even earlier I would’ve done even better in life. If I had been taught personal finance every week or year by my parents I think I would’ve been pretty educated by college. I learned most of it during and after college, but I don’t blame them. They did very well in spite of not speaking English.

    But you better believe I’ll be right there with weekly money and entrepreneurship lessons with my kid! When I was a kid I didn’t know kids could make money. I’m going to suggest all kinds of cool jobs for kids. Maybe flipping items haha.

  8. We had our kids divide up any money they got. 10% went into a jar for tithe, they periodically took that money to church and gave it in the offering. 20% went into a jar for long term savings, periodically they took that jar to the bank. 20% went into short term savings and they could use that money to buy something big whenever they wanted. The remaining 50% went into their pocket to spend however they wanted. They could also put any of the spending money in any of the jars as extra savings.

    Today they are out of college and have a good amount of money saved and contribute to company retirement plans. I think they learned how to manage their money well.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

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