Teaching Our Kid About Money
April is Financial Literacy month, so I thought I’d share with you what a deplorable job I’m doing at teaching my kid about money. My kids are four and two, so at least we have time on our side. Suggestions are welcome!
We’re familiar with Dave Ramsey’s “give, save, and spend” jars to teach kids about money and our efforts are very loosely based on those principles. So far we pay my son a couple coins—exactly which ones depend on availability—for putting away the silverware. He is currently saving for a $50 Duplo set. At the rate he’s saving, he’ll be too old for Duplos by the time he saves enough. We also periodically ask if he wants to put something in his “give” bag (a sandwich bag in his piggy bank). As you can tell, we are highly organized and official about all of this. It’s practically the Federal Reserve over here.
The poor child can’t be convinced that each coin has a different monetary value. How do you teach a kid about finances when they don’t understand the value of money? I’m sure being more consistent about the exact payment would help.
Then there’s the dilemma of which chores to pay them for, and how much. Will paying too often or too much teach them they deserve to be paid for contributing to the family? Will not paying them mean they don’t learn that money comes from work?
Does it make sense to teach them to give, save, and spend, when it’s all quite artificial at his age? Even if he understood some of the math, his money is only going to wants. We are going to meet his needs whether or not he vacuums to earn a quarter.
But then, like so many things, doing something is better than nothing. Everything doesn’t have to be perfect. I could become paralyzed trying to figure out the perfect system, but in the end it’s got to be flexible enough to work for our family, our unique children, and the shifting needs that time will bring.
For now, we have a very ad hoc system that seems to be teaching him at least something.
He doesn’t understand the value of a dollar, but he does seem to appreciate the value of his time. Maybe a little too much. He refuses to vacuum, even for a whole dollar! Which is fine, because I’m way better at it.
He’s also learning about competition in the job market. If he takes too long to put away the silverware, his little sister will swoop in, do the job, and demand payment. She also might pour sugar into the silverware tray. So we do prefer the quality of his work to that of a toddler.
He is excited to give. Last year he gave ALL his coins to the VBS drive to purchase a van for the kids at a homeless shelter. My son loves vehicles and particularly loves his friends’ van, so I wasn’t surprised he wanted to give all his money.
I also knew that there was no real cost for him to give all his coins, and he didn’t understand what he could buy with them because we hadn’t been very good in the “spend” department. I felt the weight of this when he wanted to give it all away. Then again, most of it had been given to him as random change passed on by grandma or dad (he wasn’t doing a ton of paid chores at age 3). I decided to emphasize that he couldn’t get it back, that it is good to help people, and that it was his decision. He went through with it, and Neil matched his contribution.
I was glad he was willing to give his money, but I realized it wasn’t pure generosity since he didn’t understand money very well. The VBS was also having a competition between girls’ and boys’ donations, so mixed motives were at play.
He’s recently started saving up for purchases larger than $1, and succeeded! His last goal was a new light saber, but by the time he saved up the$15 he changed to his $50 Duplo goal. It’s amazing how waiting can help us make good financial choices. Imagine if it took adults months to save up for purchases, instead of swiping plastic?
I’m proud that he saved $15, mostly through working. He was definitely motivated to do extra chores to reach that goal. It’ll be hard to watch him blow money on big purchases that I don’t consider worth it, but I hope the wait time helps him make good choices.
On the spending front–what is the difference between save and spend for a four year old? We don’t present him with a ton of options to spend money on a regular basis. I feel conflicted about his spending opportunities being so directed by us. If we take him to a candy store and ask “do you want to spend some of your money? (true story), are we teaching him to make choices about spending his money? Or are we teaching him to spend money on candy? If we take him to the Dollar Tree, aren’t we just teaching him to buy useless, flimsy junk? If we take him to Target, aren’t we teaching him to buy overpriced, trendy junk?
Confession: I mostly forget to have him bring his money places. Forgive me if I don’t remind him to cart around a noisy, metal, coin-filled bank that looks like Elmo’s head. I suppose he needs a little wallet or envelope of some sort.
A recent positive “spend” experience was when he noticed knock-off Duplos on clearance at ALDI after Christmas. The set was $4. He didn’t have his money with him so I said he’d have to come back later. He asked his dad to take him there as soon as he got home from work, so they counted out his money and went to buy it. I’m glad he picked out something himself, had time to think about it, and paid a reasonable price.
At this stage of development, financial education is on par with teaching your kid to say sorry, even when they don’t mean it. To say thank you, sometimes begrudgingly. To brush their teeth, though they would rather be raised by wolves. You try to get them to pretend to be civilized, until one day, they kind of are civilized. Hopefully.
P.S. We recently learned that our son’s name is the same as Mr. Money Moustache’s boy. How cool is that?
Any tips for teaching kids about money? What was your financial education like? What do you want to do differently or the same with your kids?