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May 07 2014

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Teaching Children Money Management

Teaching Children about Money ManagementTeaching children financial responsibility sounds daunting. But to do our part to send our children off into the world as productive members of society, my family has taken the advice of Love and Logic in the way we teach our children about money in our home.

Our children do not get paid for their household responsibilities. Both kids are expected to help put away groceries, put away their own used dishes, empty and put away their lunch boxes at the end of the day, put away their clean clothes and in general, clean up after themselves. My son’s personal task is stocking the bathroom with toilet paper. My daughter is responsible for unloading the dishwasher. I don’t think we are asking for much (yet that is- they are still young).

We don’t associate money with these responsibilities because doing your share of chores is (in part) what makes you part of a family. The kids are doing their part to enjoy the space they live in. If we associate money with the jobs than it seems that they have a choice in doing them and they don’t. Contributing to the family is non-negotiable.

I have heard many creative ways that parents dole out cash for completing household tasks and frankly, it’s a lot of work. If you are always on top of it, then great. But I for one am not and I also don’t want to be. I don’t want to follow behind my kids checking if things got done, to then decide if they earned cash because that isn’t saving me any time. It’s adding more duties for me to follow up on. And it leads to so many inconsistencies. Life gets busy and nobody’s chores get done- then you pay anyway because they kind of did them. The next time they kind of do them, you don’t pay. It sounds like a lot of unnecessary conflict.

So how are we teaching our children about money management?

Instead of paying them for the jobs they do, we give them money each month for doing absolutely nothing. Yep, you read that right. A friend was shocked over this but I explained that it’s money that we would have spent on them anyway. It’s just up to them to budget it now. It is such a bummer when they want something only to discover they are out of money. But with this method it becomes their responsibility and not my fault. It’s lovely.

We thought about how much money each child would reasonably need in a month. In giving this cash to the kids, we no longer buy snacks at a movie, chocolate milk on Starbucks trips, or gum when we’re in line at the grocery store. When the kids ask for things I ask, did you bring your money? Usually they have forgotten and the usual rule of thumb is that I don’t give loans. If they do have their money and have asked me for something, when I tell them they need to buy it themselves, they usually change their mind about needing it. Already at five and eight-years-old, my kids are very good at distinguishing luxuries versus must haves and weighing the cost of splurging now and not having money later.

In case you went from thinking we were irresponsible parents to being ogres, we aren’t either. We take them out to dinner, we buy their food and clothing, we pay for all their team activities, and we supply them with their educational needs. When I do splurge and buy them a treat at Starbucks, they are so appreciative and excited, instead of expecting it. My daughter offers to go in half on things like books that she really wants (books are a fine line between education and pleasure) and more often than not, she asks to go to the library because she understands that it saves her money to borrow instead of buy books. No longer am I the bad guy for saying no when the ice cream truck comes around. Now it’s up to them to decide if it’s worth half of their month’s earnings when we have popsicles in our freezer already. After Christmas the kids wanted a new Disney Infinity character and they combined their money to be able to afford it. Joey owed Elena money and they worked out how he’d pay her back. It was so rewarding to watch and so nice to let it be their “problem” to figure out.

Fast-forward a few years if you have teens. When I was 15 my mom would get annoyed with me for asking for money all of the time. If I caught her in a good mood, she’d give it to me, if I asked when she was stressed, she’d be irritated; it was an unnecessary argument to add to the usual teenage angst. I approached my parents to give me a fixed amount of money each month to spend on movies, football game admission, etc. and that was all I’d ever ask for. My parents loved only handing cash over once a month and I had to learn to manage my money. I became smarter about what I bought when I went shopping or what snacks I bought at the football game. I had months where I ran out and either borrowed from friends or had to make plans that didn’t cost money. When events like dances came around, my parents would give me extra money to pay for tickets. I really valued this because I knew that they could have stuck to our agreement. Considering that I was born to parents who were better spenders than savers, this was an invaluable lesson to me.

Pay your kids for chores or don’t- it’s obviously a very personal choice. But however you decide to give your children money, I highly suggest that you make them responsible for buying their own “luxury” items. Do they NEED another art set, another video game, or a drink at Starbucks just because you got one? I see way too much waste and entitlement in our youth and I worry how these children, our future leaders, will ever learn personal responsibility and money management when things are constantly just handed to them. Better to teach them now when the consequences are smaller (e.g. no money left for ice cream vs. no money to make a payment for a car that then gets repossessed). It really will make a difference.

 

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