Teaching your kids good money habits
I remember the first couple weeks after I had moved off to college like it was yesterday. One of the most impactful realizations was living with a dorm full of strangers and seeing how differently everyone was brought up. For the first 18 years of our lives we grow up in the bubble of how our parents do things. And when I got to college it was like that bubble was popped and I was exposed to so many different ways of thinking. There were kids with really good money management habits, and then there was me.
I remember getting my first student loan check and my eyes getting wide looking at the amount I was about to deposit into my account. No concept of how difficult it was going to be to pay it back, I used it as an opportunity to go shopping.
So needless to say, when my daughter was born 8 years ago, I knew I wanted to teach her about money. But I also didn’t want to make it such a big deal that all they remembered was the stress and fear associated with money. So as a parent how do you find the balance?
I compiled a list of some of the little things we do in our house to try to instill a healthy relationship with money. I certainly don’t have all the answers. If you do, please share them with me so I can learn your ways. I think parenting typically involves you just doing your best and then praying it sticks. So that’s my attitude towards their future financially sound selves. I will do what I can, and leave the rest up to them.
I know many people that feel really strongly one way or the other about this topic. I’m sort of in the middle. I feel really strongly that our kids should help out around the house because they live here and they’re a part of our family so that’s just how we roll. But I also think there’s a good lesson to be learned in working for the things you want. So what we do is give them the chance to earn extra money for doing chores above and beyond their normal, every day chores. My son is still little so his chores are just picking up his toys and putting his dishes in the sink when he’s done eating. My daughter does her own laundry and cleans her room. Sometimes on the weekends if I’m doing a deep clean I’ll also ask her to wipe down bathroom counters and clean the mirrors.
Then there are things that go above and beyond that she can earn money for. I sometimes need help with small tasks in my office and will pay her extra for helping. When I have a pile of dirty mirrors that need to be cleaned, I pay her 10 cents per mirror to clean them. If she asks for the opportunity to earn money, I will come up with other chores she can do and assign each one a dollar value and she can decide if she wants to do it. And it’s cheaper than a housekeeper! Mom win!
Incentivizing things you value
This will look different for everyone but I will give you a few examples so you know what I mean. So often we just think of chores as a way for kids to make money, but there are other ways you can incentivize them that align with your values and help develop them into stronger, happier, healthier people.
Something that is important to us is teaching our kids leadership skills. In my line of work I get to be around great leaders and see the value in teaching your kids how to be leaders from a young age. So I got the idea from a colleague to offer your kids money for reading children’s leadership books. If you just look on amazon there are so many from easy readers to chapter books. You can determine the amount you think is fair, but for us I give my daughter $1 per book because hers are chapter books and take her longer to read. I wouldn’t give her that much if she could read through it in 10 minutes.
Another great idea I got from a friend was to watch something educational, in this instance it was a Christian sermon, and have a cup of pennies sitting out. You get to pick a key word for the kids to listen for and anytime they hear that word they got to take a penny from the cup. It’s a great way to keep kids engaged and excited to watch something other than Paw Patrol. I think my husband is going to try this to get our daughter to watch a basketball game with him. Anytime they say “three-pointer” she gets to take a penny or something. He’s still holding out hope he can convert her to be a basketball fan.
Another great idea I heard was from Rachel Cruze, Dave Ramsey’s daughter. She said when she was a kid, her dad did something he called the “401 Dave Plan” with the kids. In order for him to help the kids with a car when it came time they needed to save for it, and for every dollar they saved, he matched it. If they saved no money, he gave them no money. If they manage to save $5,000, then he would match it and they could get themselves a pretty decent first car.
Now if I could just come up with a way to incentivize my daughter to put her shoes in her closet when she gets home, that would be great. Still working on that one.
Watch your words
This is a big one. And one I think we often overlook as important, but it might just be the most important. How you talk about money can stick with your kids and shape their feelings about money as they grow. Just making a few swaps can make a huge difference.
We don’t have money for that ————–> That’s not a good fit for us right now because we’re choosing to put our money towards our goal of _________ right now. Remember?
We can’t ————-> We’ve decided to focus on more exciting goals for our family.
It’s too expensive ————> I don’t value this as much as I do your (dance lessons, trip to disneyland, soccer, etc), so let’s hold off for today.
Cheesy, I know. But what seems like an easy way to get your kids to stop asking for something might develop a fear about money over time. When they’re always hearing there’s not enough money it becomes something that can over power you in their eyes instead of learning that you control where your money goes.
Show your kids how to set goals
Sometimes I forget that this is a learned skill. Kid’s are usually dreamers (cue the “I want to be a fairy when I grow up” stories) but we forget to show them to set goals and work towards them. I’m a big fan of the goal poster. I make them at least once a year, cut out pictures from magazines and glue them on, inspirational quotes, the whole thing. Apparently my daughter caught on because when she told me she wanted an American Girl doll and I told her she’d have to save for that with her own money, she made a goal poster. She glued a picture of the one she wanted, drew 120 dollar signs and then crossed each one off as she earned money. She came up with the idea to sell cupcakes to make the money quickly, and while I helped her bake because I didn’t want her to sell an inedible product, she did the rest. She went door to door selling them (with my supervision, of course) to make the money and when she crossed off that last dollar sign you could see how proud she was.
Lead by Example
Bring yourself back to your childhood for a moment. Remember how little you understood money as a kid? I remember thinking the ATM machine was just a place you went when you needed money. All kids have to go on is what you tell them, and more importantly what you show them. If they see you stressed about money all the time, they will take your lead. If they see packages show up at your door everyday because you are constantly online shopping they will think it’s easy to accumulate things. In order for you to show them how to have a healthy relationship with money, you have to start with you first. What you show them is more powerful than what you could ever tell them.
So what else do you do in your family to teach your kids about money? I’d love to hear your ideas!