If piggy bank care is any indication of future financial responsibility, them we’re in for a doozy of a ride with our oldest two.
Both kids enjoy playing with their piggy banks, an activity I only allow if they’ve found or been given a new coin to add. Peatie carries his from place to place, dumping and replacing his coins, blithely unaware of the many that he is dropping along the way. Goober, meanwhile, stays in one spot to play with her money. She is aware of the location of each and every one of her coins, and if one falls, she drops down on all fours until she finds it. She is also aware of the location of each of her brother’s coins; each time one falls, she waits until he is out of the way and then quietly adds it to her own collection. On the worst day, Peatie was lamenting that he had just three pennies left; today I only had to return $.97 to his pig to even things out.
As my kids get older, I’ve begun to wonder how to help them learn to be financially responsible. When I was young, my parents faithfully presented me with a dollar each week. I put $.10 into the Tootsie Roll bank that held my tithe money, sent $.65 to the bank with my dad, and had $.25 left for spending—which I swiftly blew through with a trip to the candy counter at The Custard Shoppe.
Though these early lessons taught me the importance of setting aside my tithe money before I considered my spending desires, I think I learned more financial responsibility as a teenager.
For a long time, my mother lamented that a trip to the store with me in tow was simply a recipe for a long list of “I want.” At some point I ran across something—an article? a TV show?—that talked about giving kids a clothing allowance so they could buy what they really wanted and have a known spending limit. I proposed this to my mom, who discussed with my dad and determined that they would give me a clothing allowance. This proved to be a distinct eye-opener. When I had to consider that buying a much-desired new sweater would mean that I couldn’t afford much-needed new jeans for another month or two, my needs and wants were clarified. I might admire something in the store, but I recognized that not everything was a wise use of my money, and I prioritized my spending.
The other element of my upbringing that I found especially helpful was my dad’s credit card policy. When we kids learned to drive, we were issued a credit card for gas purchases. We were expected to save any receipts we generated and present them to him. In college, the credit card was intended to be used at our discretion. We were to save all receipts, create a spreadsheet of our expenses indicating whether they were items that fell into his monthly allowance for our expenses or things for which we’d need to repay him, and submit both the receipts and spreadsheet to him each month. This system gave me practice at tracking my expenses and crafting a basic budget for myself covering more than just clothing. Due to my dad’s system, I am actually better at keeping track of my expenses on credit cards than I am with cash; I use credit almost exclusively, paying the bill in full each month and reaping the reward money as a bonus for my daily expenditures.
So when do you need to start educating kids about money? We already discuss the fact that Daddy goes to work to earn money to pay for the things we buy from the store, and my kids will ask if things are on a good sale this week, so we’re starting with some basics. When is a good age to take the next step?
It’s been long enough that I have no idea when I began to get an allowance (and neither do my parents). When I was little, a buck was a decent allowance—enough to tithe and save and still be able to afford a few pieces of candy each week. How much is appropriate now? I’ve read the suggestion of a dollar a week for each year of life, but I can’t think where I’d come up with a couple hundred dollars from my budget (never mind that the amount will be over $500 in just a few years).
What do you do to help your kids learn about money? And how do you make sure the lesson of financial responsibility hits home without passing on a sort of scarcity obsession?
butmostlymommy 
I love this topic. I heard somewhere that kids are ready to *really* talk about money when you present them with a dollar bill and a five dollar bill and ask them which one is worth more. For me, I just talk about money whenever it comes up, such as working or withdrawing money from the ATM (that it’s not just money from a building, but money I put in there to take when I need it).
I grew up with an allowance too, and thankfully never acquired debt. Still, I probably could have done more with saving instead of spending, which I assumed everyone does once they have a job.
Now I’m big on saving and plan to instill these values with my kid. We’re frugal but not stingy; meaning, we’ll easily plop down the cash on things we value and do the opposite for those we don’t. I want to teach my kid how to save long-term (college) and short-term (for a more expensive toy, for instance) while also having “wallet money” that he can spend immediately.
If he were to save money in either short- or long-term savings, then I would match what he puts in there. This will help him see the benefits of matched contributions typical of 401(k)s as well as the importance of compounding interest.
But he’s only 2 for now, so I have a ways to go. But I do have his personal savings set up on an online bank for when people give him money. I put half into his college fund and the other half into that savings account for him to spend as he wishes.
It definitely sounds like you’ve been thinking ahead! I’m thinking your son will definitely appreciate it when he’s ready to buy a car and head for college!
The “frugal but not stingy” part is a rough balance for me. We put a lot into fixing up our house and saving for eventualities like a new car, but we budget next-to-nothing for entertainment, which seems hard for others to understand and accept; it’s also hard for me to be okay with spending money just to keep up relationships. (It somehow seems silly to need to spend money to maintain relationships.) Others see us revamping the bathroom or getting a new front door and think, “So why did they just order an appetizer when we went out? They obviously have money!”