It should be easy to teach our kids about money. We have it, they need it. The leverage is clearly on our side — which is not always the case with parents and kids. But teaching children to respect money with out granting it too much power remains one of the more contentious, emotional, and frustrating parenting quandaries. It’s important to get this right: research shows kids form spending habits by age seven Here are the biggest parenting landmines when it comes to kids and money:
Starting Too Late
It often seems like little kids don’t even notice money. But money wallpapers their lives. You perch your toddler in the shopping cart at the supermarket; she sees you hand over money to buy food. Your kids are buckled in the back seat of the car while you pay for gas. You buy them toys, hand a wad of cash to their babysitter, shop for their clothes.
All of these daily parenting activities give us opportunities to explain to children how we earn money, and the power of it. But we rarely take advantage of these moments to talk about money with our kids. Instead, until our children are teenagers and outright start asking for cash from us, few parents talk to our children about how much money we have, how hard it was to earn, and our priorities for spending it.
The Kardashian Effect
I have two teenaged daughters. They both, to my horror, pay attention to every single thing Kim Kardashian wears, says and does. Celebrities, Kimmy in particular, present a challenge for parents. Obviously a young woman earning millions of dollars a year for not much more than posting selfies of her derriere is hard to decode in ways that the teenaged brain, especially ones with limited data on earning money themselves, can comprehend. Try anyway. Make it a word problem. Start with “minimum wage is $7.25 per hour. Kim’s Jimmy Choo shoes cost over $3,000. So it would take you 414 hours – or forty 10 hour work days — to pay for them. She’s a mutant and not a role model.”
Different Values Between Parents or Other Family Members
It’s always a problem to model good financial behavior to children when the adults in the picture value money differently, or have differing amounts. Research shows that money is consistently one of the top two topics married couples fight about most (sex is the other). So – let me state the obvious – your kids may already know how you feel about money, because they’ve heard you fighting over it.
Why not use this difference as a positive? Admit to your kids that mommy or daddy or grandma feels differently about money than you do. State your priorities – maybe you want to save for a house, or to go back to graduate school, or to buy them a pony one day. Talk to your kids about what you thought of money when you were a kid, your earliest jobs, and why you value earning money today. There’s no need to judge anyone else’s spending habits, but there’s also no good reason to sugarcoat or obfuscate that your values are individual. “Uncle Billy won the lottery, and so he can buy his kids new cars for their 16th birthday. We can’t.”
Now, when it comes to creative ideas about kids and money, there are many, many columnists and websites and entire books written about how to teach our kids the value of a dollar. A good place to start is Forbes Magazine, a financial bible for many adults, and luckily, even our kids. Your local bookstore will have books on kids and money, including one of the best, Ron Lieber’s The Opposite of Spoiled. Or visit the very helpful website Money As You Grow, which has financial tips for teaching kids of every age about money. For the youngest kids, the site suggests focusing on four easy points (with ideas for activities) that most parents take so completely for granted that we forget to pass them onto our toddlers: 1) You need money to buy things 2) You earn money by working 3) You may have to wait before you can buy something you want and 4) There’s a difference between things you want and things you need.
My favorite advice, as usual, comes from copying other parents. Start a system with three jam jars: label them savings, spending, and sharing. Have them do chores for spending money. Give them $20 and ask them to buy the family’s fruit for the week at the grocery store.
Great ideas, but I hated all that stuff as a parent. It was a lot of work – for me. I found that responsibility for their money was a painless teacher. When my children were between about 6 and 10, I gave them a weekly allowance that they had to keep track of and ask for on Sundays. When they forgot to ask, they didn’t get an allowance. If they needed additional money, I asked them to do specific clean-up tasks, helped them find babysitting jobs, or worked out some kind of compromise (“You pay for half” was my favorite to stop excess spending). In general, I waited until the kids came to me with ideas – a friend had a clothing allowance, for instance, and we copied that to the nickel.
But the best opportunity to teach my children about money has been my own divorce from their father two years ago. Their father and I argued, among ourselves and via lawyers, over money. The kids couldn’t help but notice and overhear. Then, my financial situation changed. On my first vacation with the kids after the divorce was finalized, we drove instead of flying, to a place we’d always flown to. It opened their eyes when I explained how much it cost to buy four round-trip plane tickets, and rent a car for a week, vs. buying a few tanks of gas to drive the car we already had. In a funny way, having less money was an upside of divorce.
Which leads me to the best parenting advice I have about money – model good behavior yourself, and don’t hide your financial reality or your values about money from your kids. Most of money’s power comes from the fact that we don’t like to talk about it, or we talk about it too much. Look at your own spending behavior and your worship of, or ease with, money’s role in your life, and reconsider or trumpet what you are passing on to your kids.