Teaching children

[smr91481]

How old were your children when you started teaching them about money? I want my kids to be much smarter with money than I was. I'm figuring things out for myself these days and learning a lot but no one ever taught me when I was young.

My four year old knows that I go to work every day to make money, but that is the extent of her knowledge. Is it too early to start teaching her? And how do you get started?

 

[GrayHare]

At a bank open an account for her (some have special accounts for children), then take her there and get her used to depositing a portion of gifts/allowance/earnings as savings.

 

[smr91481]

I'm thinking of coming upright a short list of chores for her to help with. We will have a daily list and have her cross off the items as she does them. If she crosses everything off then she gets her money for that day.

She gets the concept of working for money and always talks about wanting to work like dad does.

 

[kumquat]

Define 'teaching about money'.

At about age 6, we taught our kids that if you want something you have to work and save for it. At that level both are good at working and saving.

Being ~30, both have, finally, paid their debts and are trying to save. I've encouraged them to do so but 'teaching' only includes pointing them towards 'Bogle' type writing. Aim them yes, indoctrinate them, no. They have to learn for themselves.

It's a bit like when they wanted me to help them select their first car. I refused since dad's ok might imply a perpetual warranty. As it turned out, dad showed them how to do a lot of car things up to and including rebuilding a FWD Ford trans. He didn't buy any parts though. He did teach them how to do simple maintence (like oil changes) to save a few $.

I've suggested reading about 'couch potato' investing if they aren't into setrious investing reading and i hope it works. They'd better learn before me and DW croak. If not, riches to rags in 1 generation.

 

[Nords]

Raising a money-smart kid | Military Retirement & Financial Independence
Raising an ER-smart kid | Military Retirement & Financial Independence
Retiring early– with kids? | Military Retirement & Financial Independence

The books recommended in these posts have been especially helpful ("First National Bank of Dad" and "If You Made A Million"). At least, so far so good.

 

[smr91481]

Define 'teaching about money'.

I don't know exactly what I mean… I think I'm just looking for suggestions from other people based on how they handled it with their own children.

I just want to make sure that my kids learn how to handle money properly at a young age. When
I was young no one taught me anything about money and I went through years of making mistakes and had to learn the hard way.

I was well into my 20s before I realized that I needed to educate myself and clean up my mess. I would like to save my children from some of those same problems.

 

[MichaelB]

Before my kids were in high school I started drilling into their brains that credit and credit cards were no good. That lesson appears to have worked. They had summer jobs while in college, at the first tax return I started talking about IRAs and retirement saving, offering to match funds that they saved. That worked too, but not as well.

 

[donheff]

If anything we taught by example. We were conservative in our buying habits and avoided debt (other than mortgages and 0% car loans) like the plague. We were out front and talked about this. As soon as the kids started working at regular part time jobs we started in about the importance of savings and with FT jobs after college we hammered the retirement savings/index fund concept home. It seems to have taken since they both max out their retirement vehicles, have emergency funds, and are not spend thrifts. I think the most important influence has been that DW and I ERd and are happy about it. The kids and many of their friends aspire to the same although they are not overly focused on it at their young ages which I see as a good thing.

 

[freebird5825]

I have no kids, but I'll post about things my Mom taught me as a very young child.

I used a piggy bank (with no stopper plug) for "found coins" or earned coins (lemonade stand, nightcrawler sales to a neighbor) instead of spending it. I could take coins out anytime I wanted. I made the piggy bank in ceramics class. I still have it.
When the piggy bank got full, then I would roll the bank back and forth to get all of the coins out. I counted it myself. Whatever was in the full piggy bank went into a savings account.
Any babysitting, cleaning, sidewalk snow shoveling, 4H county fair prizes, etc was deposited for me by my Mom. She would show me the passbook so I could see the balance. I was allowed to keep a little of it but the majority got deposited.
If I needed money from the savings account, I had to come up with a better reason than candy or soda. If the reason was good, Mom would take me to the bank to do the withdrawal on her next day off. If the money was needed immediately, she would do a "loan" from her pocketbook and do the bank withdrawal on her next trip.

Once I was a teenager, I kept track of my earned pocket money myself. I still gave money to my Mom for my savings account. I continued to do so until I was 18 and could go to the bank by myself.

I never had too much saved, but I learned the habits of saving, accumulating, and depositing while I was still in grade school.

 

[Sue J]

One of our sons was about 7 or 8 and had some birthday money. He had saved his money for a few months. There was something he really, REALLY wanted at Toys R Us. I thought it was awful (a stuffed Stimpy from the "Ren and Stimpy" cartoon that made a farting noise when squeezed) but I told him that if he wanted it he had to use his own money. I stretched it out as long as I could, making 2 trips to the store, hoping he would change his mind but he really, REALLY wanted it!

On the last trip he stood there in the aisle with his cash and the awful thing and I explained about the sales tax and how after he paid for the thing and the tax that he'd have only $.33 left and how did he feel about that. He took a long time to decide and I was very patient and didn't try to convince him either way. We walked around the store and he looked at other items and I explained how if you bought that book or that car you'd still have this much left of your cash.

It didn't work, he really, REALLY wanted the farting thing. He bought it, handed over his precious birthday money, got his 33 cents change and we took it home. He was quite pleased with his purchase but later told me how bad it felt to not have his money any more.

It was a great lesson in delayed pleasure in buying things, the feeling of buying something you really, REALLY want and the consequence of being without your money. He has grown up to be a hard worker, good saver, frugal spender and at 25 he is debt free with no credit cards.

His dad felt that birthday money is for blowing on something as soon as it hits your pocket and that blowing birthday money on a farting thing is the ultimate in usage of "found money" so he didn't have a problem with it except for how long we took in the store.

 

[frayne]

My parents taught me I could have anything I wanted as long as I paid for it.

 

[savory]

In one way or another, I think my experiences are listed above. The thing I did not notice is taking your children to your workplace and explaining your job, how it relates to your paycheck, etc. Show them what is means to earn money. I think it helps close the loop from where do my parents go during the day to how did the food end up on the table.

 

[smr91481]

In one way or another, I think my experiences are listed above. The thing I did not notice is taking your children to your workplace and explaining your job, how it relates to your paycheck, etc. Show them what is means to earn money. I think it helps close the loop from where do my parents go during the day to how did the food end up on the table.

I actually did take my four-year-old to work with me this past Sunday. She was pretty excited she got to "help" me work all day and earn a little money. When I walked out the door this evening she was at my feet asking if she could go to work again.

 

[LOL!]

Lots of lessons for your kids just by living. Some examples from our household:

1. When they are young, you can comment about every TV commercial: That's a rip-off! Look at the fine print! Never ever invest with Smith Barney! Call me before you ever spend any money on something like that.

2. Give them a checking/ATM card in a separate joint account when they are 14 or so. Do not wait until they get older. Transfer allowance into their account rather than give them cash. Make them pay for things with their own debit card.

3. We had an emergency fund for our daughter to use while away at college. She abused it, so I drew it down to zero. It was very funny when she tried to use it to buy food and beer. She had no money!

4. Make them get jobs early and often.

 

[Htown Harry]

Here's links to a children's finance site and a reading list of children's books, both recommended by a CPA association

ADD MONEY-MINDED BOOKS TO THIS SEMESTER’S READING LIST
Whether it’s paying for a school lunch or receiving a weekly allowance, children are aware of money. TSCPA recommends you add money-minded books to your child’s reading list this fall. These books will keep your children reading and learning that money really doesn’t grow on trees. Check out the Childhood section of ValueYourMoney.org for more personal finance information for you and your little ones.
Recommended Reading List of Money-Minded Books
Childhood Section

 

[rodi]

Any birthday or Christmas money that comes to the kids in the form of checks is deposited in their savings accounts. They kids know their savings is for long term goals, like cars or college. They are not allowed to access that money, but do know how much they have in the accounts.

For day to day money we pay for some chores, and other chores are just "expected" as part of the family. We've explained that we aren't paid for cooking/cleaning/weeding... we do it because it's part of living in our house and being part of the family. The same applies to them. That said - we do pay for some chores. And that is tallied.

We keep a "conti" book for the kids running totals.

When they want to purchase something - they have to make the case/justify it to get the money to spend. Candy is never approved. Various video games can be approved. (I refuse to buy them that stuff).

Example - the 11 year old recently wanted the full version of minecraft - it's $27. He had 25 on the Conti book - so he had to wait till he'd done more chores. This delay made him appreciate it more.

They know the bank account money earns interest. They get statements.

My 11 year old has also started mowing lawns in the neighborhood. He gets $5 to do a very small patch across the street from our neighbors. They are thrilled because it's less than the mow-n-blow services, and my son is thrilled that he can do 20 minutes work and earn $5. Total win-win. He's now asking every neighbor he sees if they want to use his services. We're encouraging this.

 

[ziggy29]

It was easier to teach kids the value of saving when savings accounts weren't earning 0.1% interest...

 

[Nords]

It was easier to teach kids the value of saving when savings accounts weren't earning 0.1% interest...

David Owen, the "Bank of Dad" author, recommends making it easy on the kid. The first BofD account in our house paid one penny per dollar per month, and it took our kid about 10 seconds to grok that good deal.

When she learned how to calculate percentages and realized how that compared to real-world bank accounts, we "updated" the interest rate to 0.5% per month, compounded monthly.

When she turned 18 years old, BofD shut down and distributed its assets to the shareholder...

 

[kumquat]

I continued to do so until I was 18 and could go to the bank by myself.

Interesting, I got my first bank account when I was somewhere between 5 & 8. At 11, I had a paper route. I had to "buy" the papers from the publisher via cheque every two weeks. That meant I had to collect from my customers and deposit the money first. I had complete control over that account at 11 (and probably before, but I may or may not have known it).

Is this a USA/Canada difference or is it a born in 1949/195? difference?

 

[Bimmerbill]

I am teaching my kid that money is for saving. She has a good stash from her last few birthdays. Now when she wants something and I tell her to get her money, she says "but dad, I don't want to spend MY money!"

 

[haha]

If anything we taught by example. We were conservative in our buying habits and avoided debt (other than mortgages and 0% car loans) like the plague. We were out front and talked about this.

This is about as far as I got with my children. They are both doing very well, but they are both high-livers. In my family of origin, my brother and I, born in the 40s, are quite frugal, as were my parents who were depression era. My two younger sibs, born in the 50s, never saw a dollar they didn't want to spend.

A lot depends on kid's friends and coworkers in their first jobs. If lots of them are driving Porsches, most times the kids will be too, no matter how hard the parents tried to transmit frugality.

Ha

 

[Sue J]

We always had savings as a component of gift money. When the kids were under about 5 it all went into their savings or I'd buy a US Savings Bond. As they got older, some was theirs to spend but most would be saved, either in their bank account or cash in their bank at home.

One of DH's sisters actually complained that she didn't give them money for it to be saved! She gave it to them for spending and she didn't think it was fair that we insisted that some was saved. She is from the side of the family that thinks "found money" should be spent as soon as possible on something you wouldn't buy with money you earned. She is single, no kids and lives paycheck to paycheck.

There's a great lesson, right there.

 

[Bimmerbill]

My mom made us save 75% of the money we earned in high school. She let us blow the first paycheck, then we had to start saving.

 

[Janet H]

My kid had no money until he entered kindergarten. On day 3 when he came home with a note about cursing in class, we gave him a small allowance and set up cuss jars. Everyone in the house paid a fine to their jar for each word and at the end of the day the owner of the emptiest jar got to collect the revenue from all. He cleaned up and never got another note pinned to his coat. I lost a lot of quarters.

In the following years the allowance was raised but never very large. He had daily household chores to do, but they weren't tied to the allowance - chores were the price of being a household resident. The desire for "stuff" drove him to do extra work or find small jobs. The key here was that we didn't buy him a lot of "stuff'. Toys, candy, soda and gadgets came at holidays only, so if there was some awesome item he wanted, he usually had to work for it.

When he was in 3rd grade and could reliably add and subtract, we set up a savings account for him and also increased his weekly allowance to include the cost of 3 school lunches each week. He was expected to manage this himself and if he made his own lunch, could pocket the reserves. He was also expected to pay for things like club dues (scouts, etc) from his allowance.


Start now but start small...

 

[Snoozie]

NO - You can start teaching her NOW! She knows you go to work to EARN money - it's not GIVEN to you. Let her do some simple chores to EARN money, too. Teach her to save part of it, and she can spend part of it. YOU CAN NEVER START TEACHING THEM TOO YOUNG!!! And when she does get old enough, let her get a job - PLEASE!!! Too many of today's kids are spoiled rotten and have no idea about money management because most of them have never had a part-time job (too busy with sports, etc. at school! Go figure!). And let her pay part of her "expenses" - clothing, gas for car, insurance, etc. If she learns young to budget and be responsible, she's going to have a MUCH better chance at being successful with saving for her future as an adult!!