July 09, 2008,
R.B. asks from Los Gatos, CA on July 08, 2008
Teaching Kids About Money
My boys are 7 1/2 and 6 years old - How do I teach them about money? They have a piggy bank and put money in it that they get from relatives, etc. We also did a "star'" chart for a while where they earned stars for chores or good behavior and once they got enough stars we would get a toy. But that has tapered of ...
Today, my son asked when we could buy something with the money he had saved. I don't really want to just spend his "savings" but I also don't know what else we could do that is meaningful.
Any advice or book recommendations would be appreciated.
5 moms found this helpful
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What a great resource this is. I got 34 responses!!! Thanks to all who replied. After I make my way through reading all of them I'll decide what to do. (BTW, a few years ago, my husband suggested that I start an online "mom's network" as a business. Of course I didn't do it. Now Mamasource is here. Should've done it because look how successful this is!
M.D. answers from San Francisco on July 09, 2008
C.C. answers from Fresno on July 09, 2008
My kids are a little bit too young to really "get it" yet (they still think quarters are better than dollars because quarters are shiny), but when I was a kid, I received an allowance that was not tied at all to chores. My parents' idea being that chores are something that kids have to do to help run their household, not some optional thing that they're going to get rewarded for doing. Second, that kids should be able to spend their allowance in whatever way they want. Even if mom and dad disagree. I remember spending my money on some really dumb stuff, but eventually learned all about saving up and budgeting. My parents would buy me school clothes, books and that kind of thing, but the "nice to have" items had to come from my allowance. My mom's famous line whenever I asked her to buy me something: "Do you have any money to pay for it?... No? Well, either do I!"
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L.R. answers from Stockton on July 09, 2008
Here's a cute little book I stumbled upon. It's titled "Rock, Brock, and the Savings Shock". It has great rhyming text and a really good message about money, including valuable interest charts. I got mine from Amazon as a gift for a friend who was having a baby named Brock, and she read the story at her shower and everyone (many teachers in the room) loved it!
J.T. answers from San Francisco on July 09, 2008
Hi R. -
This is a touchy subject, as we are a bit weird about talking about finances in our society, but I'll tell you what I have done.
I started giving my son an allowance at age 7. He got the number of years he was each month -- so, he got $7 a month. This was not tied to chores, to doing anything around the house -- nothing. It was his to spend.
The trick was this -- he did not get to bug me about buying stuff. No whining for toys, Pokemon cards, candy, etc., and so on. If he wanted something, he had to save money and buy it. I gave him NO restrictions on what he bought.
Yes, initially he blew his monthly allowance on silly things. And immediately had buyer's remorse and regretted his purchases. Yes, he 'borrowed' against future allowances, and then got into debt with the Bank of Mom, and had to go for several months without any cash.
Are you getting the picture? <grin>
As he got older, he got more money -- at 15, he now gets $10 for each year, so $150/month and he has an Orange account from ing direct (www.ingdirect.com). He gets half in cash, and half goes into his savings account. Yes, that's a lot of money. But NOW he has to pay for his lunch every day, buy ALL of his own clothes, pay for all school dances, movies with friends, birthday gifts for friends, video games, iPods, music and consoles, etc. He NEVER asks me for money, nor does he whine about stuff he doesn't have and wishes he did, and let me tell you, that is worth $150 a month! :) And, if most parents figured out how much they actually spend on these things for their kids, it would be more than $150 a month.
Finally (and most importantly of course), he has learned to spend wisely, save as much as he could for large purchases that he really wanted. Over the years, he has bought two computers and a flat screen TV with his savings, as well as managed his own budget on daily living expenses.
So, my advice is this -- at age 7, let him blow the money and learn the lessons with pocket change. It will pay off when he is older, and you will be teaching him some critical lessons!
All the best,
6 moms found this helpful
P.R. answers from San Francisco on July 09, 2008
I started giving my daughter an allowance when she turned 5, starting at
$3, now she is 8 and she gets $6 each week. Our agreement is that she buys any toy or book etc, but mom buys her all necessary articles of clothing, food and candy. She can spend it on anything, and we don't tell her she can’t buy a certain toy for example, although I might ask once (and only once) whether she really needs it, and to help her check quality. After two years, she has learned that many toys can be crappy, so my guidance on quality over time has become more meaningful to her. I usually also pay sales tax because its just too tricky for a kid to understand that a toy marked at a priced of $11 may end up costing $12.
I don't connect her allowance to any performance of any kind. Doing
well in school should make her feel proud of herself. Doing chores is
an essential part of being part of "family", and she has to know that
intrinsically she has to look after herself and take responsibility for
herself and her own things (gradually as she grows up). External rewards
such as money, in my view, completely muddy the concept of 'internal'
rewards and responsibilities. We never use allowance as a punishment or a
reward – rather it is used as a learning tool. After all at age 8, she is halfway through her ‘childhood’, so I want my kids to be able to use money wisely.
I initially tried to get her to divide her money into 3 - spend, save and charity buckets. But that never worked, and I realized that such a concept is just not meaningful for kids. After she saved $100 she found it way too difficult to decide how to spend it on poor people, and figured that she would not make a huge difference anyway. Hence she decided to be charitable in other ways. She gives her toys to charity instead, and we speak often about poor kids, and what that means for them. At her last birthday party she refused presents because she thought she was being greedy (we had asked over 25 kids!) and we had a book swap instead. As for savings, the idea of a "retirement" plan savings for a now 8-year old is way beyond her. The idea of giving an allowance is for kids to understand what spending means, and what it takes to save.
The results of our family policy have been nothing short of amazing. I am so proud of her understanding of the value of money after just a few short years. She discovered that if she saves, she can spend way more money that she could otherwise. Initially she used to spend her $3 per week on practically anything she saw – then she saved up she can buy much larger, and more desirable, toys. I have found that by not restricting her
choice of spending has meant that she was able to figure out for herself
what works and what doesn't.
Then she just got savvier and savvier about money. She has now almost $400 in the bank. At 7 she got her own ATM card, which was just a great moment for her. She would ask me in September to buy her a toy for Xmas, and that way she figured she would get the toy and not have to spend a cent. Same deal with birthdays etc.
She stops now and figures out about value. This spring she began reading the Harry Potter series and after the library was out of books, she decided to buy them herself. She forewent having the hardback versions for the softback because there was a $60 price difference, and she opted to pay the least amount for them that she could.
I had a garage sale at the start of summer, and she packaged up her old ‘silly’ purchases of toys, and sold them. She gets to keep the proceeds of her sales – after all, they were her toys – so she doesn’t have to save them for little sister. She went through a transformation that showed her what happens when we start owning ‘too much stuff’ and she found a solution by selling her things. It made her feel very responsible as she had to emotionally detach from her toys, and was a time to reflect on her past ‘impulse’ buying. Her brother suggested she could now buy more toys, to which she heartily responded that she needed a good education, a laptop and a cell phone when she was older, so was certainly not going to start throwing her money away now on just toys.
She reminds me of an old financial planning saying – “Savings is nothing more than a spending plan.”
I used to give her the money, and she would physically have it in her
room. However she used to play with it, and transfer the cash from purse
to purse and it would end up getting misplaced. So now I keep her cash
in my room, and each week we discuss how much she has. She has had a few windfalls from the tooth fairy who never had small bills (unfortunate
timing for mommy).
My sister has teenagers, and the agreement in their family is that she
gives them something like $40, and that has to cover their entertainment
and clothing as well. If they run out mid-week, there is no advance, so
they can't do their weekend dates as planned. I have decided that gradually my children can expand their spending choice to include clothing too.
I didn’t ‘teach’ my daughter anything about money - rather I feel that I provided her with a non-judgmental tool for figuring out about money and its value all by herself. And I am proud to say she did a marvelous job! If my daughter was restricted in spending her money, she would never have been able to appreciate what 'savings' means.
R., let your sons decide what to do with their savings - they might spend them quickly, but maybe they will save up for wat they really want too.
4 moms found this helpful
H.D. answers from San Francisco on July 09, 2008
With our kids we have taught them half/half, meaning you put HALF in your piggybank for something really special and the other half you can spend any way you want. We always discuss things like Christmas, birthdays and other special occassions when they might like to buy a card or a small gift with their own money, doing the half/half helps them be able to do this.
When they get to be teenagers we talk about breaking it into thirds. Take 1/3 and spend it any way you want, 1/3 for short term savings like a dinner/movie with friends and the last 1/3 towards something big. By teaching them this you are giving them a tool they will use ALL their lives!
My 23 year old daughter just got married, she was able to pay for her expenses (that we didn't cover as the parents of the bride) from her own long term savings. She used NO plastic!
Our 20 year old has been able to pay her way through community college, visit us (she lives out of state) and move into her own apartment (paying all the deposits, first/last months rent). She also has NO credit card debt! Least you think these girls get help from us, they don't. Both girls work, one is a teacher's assistant and the other a waitress.
Our 26 year old son said PFFT to the idea of savings, spent every cent he has, ran up 3 or 4 credit cards, lost his car, had to move home and regroup. After smacking him upside the head (verbally) and helping him get his act together he is now struggling to impliment the half/half rule....MUCH harder once you have major debt!
This teaches the kids to live on less, appreciate what you have more and achieve awesome goals! It is well worth teaching them. =)
4 moms found this helpful
D.M. answers from San Francisco on July 09, 2008
My girls are 9 and 10. Ever since they were 5 and 6, on a weekly basis they get the equivalent of their age in allowance. BUT, they have chores they have to do to get it. At the beginning of the week, we give them their allowance in dollar bills....If we have to remind them, or they completely forget to do them by the time we have set out for them to get done, they have to give us a dollar. We have a jar on the counter that the dollars go in to and at the end of the week we go get ice cream with the money to say for 1. good job on the chores you did remember, and 2. they are taking the family out for some quality time with the money that should have been their's. Some of the chores we have them do are feed the dog and cats twice a day, make sure their room does not have ANY clothes on the floor, and on the weekends they have to empty the garbages and clean their bathroom by 5pm Sunday. If they loose a dollar or more, but are able to not loose any for at least the next three days, they can start to earn the lost dollars back by doing extra things no later than Friday...(come friday, the previous week is over and they get the next weeks dollar bills.)...sweeping, dusting, helping to fold laundry etc etc. A lot of the time since they are young, the don't do the chores as well as an adult would, but they try their hardest and that is what is important.
We also opened them savings accounts, and every month they take the cash they have earned to the bank, complete the deposit slip on their own and deposit the money with the teller on their own. They also have a savings account log they track their money in.
I believe in packing lunches as I don't like school lunches, but if there is a day here and there they want to buy lunch they can, but they have to pay for it. When there is a birthday party they are invited to, they pay for half the present. this part did not start until they were 8 and 9 years old.
Eventully they built up their savings accounts to about $700, so my 9 year old really really wanted the Razor motorized scooter at toyr r us...$250.00, she bought it. After they see the price of something and deduct it from their savings balance, they see what they will have after, and a lot of the time decide against it. The scooter is something she really took a long time to make the decision on. When we go to fairs, or something that has those games that you never win... ;), they bring $20 and we will match them $20, and that is their limit. (We pay for them to get in, so the games and rides is what the $20/$20 match is for.)
So far so good, this has been the most successful way to teach them responsibility for their chores, consiquences for not taking care of their responsibilities, and money management. In the past we have tried chore charts, stars, toys and nothing ever worked.
Also, if we have a garage sale or something, if it was theirs that sold, they get the money, if someone wants to buy something of their's they deal with the haggling and sale. I think this teaches them the value of what they own.
So, I hope the book I wrote helps, sorry it is so long!!! :)
3 moms found this helpful
S.F. answers from Sacramento on July 09, 2008
I reconmend the books "Money Doesn't grow on Trees", "A Penny Saved", and Dave Ramsey has Financial Peace Junior. My children have become very wise on making spending decisions. They have learned that sometimes cheaper is better and sometimes you get what you pay for. They are 9 (twins) and they split the money that they earn 4 ways: God, Gifts for others, College savings, and Blow $. They are allowed to blow that $ on anything and I have learned to bite my tongue unless they ask for my reconmendation. They have learned at an early age delayed gratification. In fact, they are both saving for Nintendo DS's. ($135 with tax!) Good luck and don't forget to find what works for you. ~S.
3 moms found this helpful
K.L. answers from San Francisco on July 09, 2008
I saw this book on Amazon and it got good reviews. It's called, "Raising Financially Fit Kids" by Joline Godfrey. Here's the link...(you'll have to copy and paste into your web browser)
2 moms found this helpful
M.D. answers from San Francisco on July 09, 2008
S.W. answers from Sacramento on July 09, 2008
We are working on teaching our children about money as well. We have just finished reading Secrets of the Millionaire Mind. I strongly suggest this book. We have read it to our children (now 10 & 8). We also purchased Grooming Children for Success http://www.danijohnson.com/nextgen/homestudyprogram.php
Dani is a success coach for peopple and multimillionaire. She is also a committed Chritian so she uses the Bible in her program.
If you just want a little coin bank, this is a good one: http://www.christianbook.com/Christian/Books/product?item...
We have learned one very important tip. Don't ever say we can't afford that to a child. Say we choose not to buy that so they understand that money spending is a choice and to not just spend on every whim. They will understand people can control the spending/giving of money. Lastly we have set up home businesses for our children. Their goal is to graduate from high school with 10K per month. We use Mannatech for this: www.mannapages.com/helath4u (my 10 yr old's site) They understand a lot from reading them adult books. I would also suggest the Go Giver by Bob Burg, The Richest Man in Babylon by George Clason, & Rich Dad Poor Dad by Robert Kiyosaki. Hope that all helps some.
Blessings ~ S. ###-###-####
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