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Teaching kids to manage money

catgirl

Veteran

Aside from the obvious (allowance, chores, talking their ear off), does anyone have tips on getting tweens to understand the value of money and be grateful as they grow more independent?

I am planning to volunteer at a kitchen for underprivileged children with my son and also to begin helping him budget. Like many kids his age, he doesn't understand the value of the latest pair of Jordans. On the other hand, I have a bit of a footwear issue myself.

I think we will also sit down and share a family budget with him.

Any other suggestions? TIA!

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20 replies

Latest reply was from catgirl

elpgal

Veteran

One thing my parents did was to let me grocery shop. For instance, ask him to shop for his next sleepover breakfast with a budget of $20 under whatever constraints you have ( organic or unprocessed or whatever you normally do). You can go with him and provide input and think aloud as you go.

rabbit

Veteran

What my parents did was paid me for chores (each had a set $ value - some were required and some were optional ways to earn more money), and fined me for either behavior related things or not doing required chores by a certain time frame (end of the week, etc.). I didn't have an additional allowance. There was a chart on the refrigerator where payments and debits were entered and the idea of tracking income and expenses was something my sister and me paid very close attention to because of this. We would also cash out of the 'bank' and record it on the chart when we wanted money to buy something specific.

I also had a bus pass and was given lunch money if needed, things like that, and necessary clothing purchases (winter coat, new shoes when they wore out, some seasonal thrift shop trips to replenish tops and bottoms-- I think there was a yearly budget for these necessary things and I didn't pay for it.) Anything considered ~fashion or a want rather than need though, like a pair of converse in another color would usually have either come out of my own allowance or xmas gift money.

JAileen

Veteran

Our son was really into music. Although we already had several musical instruments in the house, he wanted other instruments - an electric guitar, electric bass, etc. We did want to encourage his interest in music, but also wanted him to realize money didn't grow on trees. We told him we would only pay for half of the cost of any new instruments, and he would have to pay for the other half. This way we also knew he really wanted the instrument, and it wasn't just a whim. He saved his money to help buy several instruments during junior high and high school. He still has them.

greycat6

Veteran

We do a variation on all of the above. We started with small things like saving up for certain non-essentials and worked up to grocery shopping. We have not shared the specific dollar value of entire household budget with them as I think the magnitude would be overwhelming. We have talked about the different 'buckets' that we put money into each month and some of those amounts. The cell phone bill and internet/cable tv package was a good place to start with this exercise. Very tangible for my kids.

We have made it a point for our kids have some 'skin in the game'. Our hope is that makes them appreciate what they have. For example, before our 16 year old could get his driver's license, we made him call the car insurance company to inquire about what will happen to our premium when he was added to the policy. It was a very sobering conversation for him. (it doubled our rates) He is responsible for 25% of the insurance premium and fuel as needed as a privilege to drive our cars.

Good luck with this. You are headed in the right direction!

rachylou

Veteran

Oh gosh man... The complicated stuff, like dealing with tax forms. I was encouraged to get a real job, and love working, but boy I wish my mum had shared her joy of forms instead of being so punishing at tax time... To be honest, to this day I automatically start to feel pain about forms in December.

RoseandJoan

Veteran

Pardon my ignorance Una, does Alaska have a minimum wage? With Teah, we asked her to tidy her room/ help wash the car for an hour and laid out the coins of the minimum hourly rate in front of her. We explained the tax man took x and moved a coin away, we explained the mortgage/ utilities/ food took y and again moved a coin away. We explained saving for the future and moved a coin away. We then looked at the fun money left on the table. Now when Teah asks for something we can speak in terms of how many hours work would it take to buy the item and gently remind her that not all income is fun money.

anchie

Veteran

Since my daughter turned 8 couple of months ago I have started giving her set amount of money instead of buying things for her. Suddenly she does not have so many needs because she quickly realized how easy she can run out of money. She now carefully considers every purchase and more often than not she decides not to buy something because she may need money later for something else. Helps with the math too.

Anonymous

When my DD was younger she had a set of chores plus she received an allowance. She could spend her allowance anyway she wanted. I only stipulated that she write down everything she spent the money on and kept the receipts. Before she received her next monthly allowance we reviewed her expenditures and discussed how she could spend less in the future. She came up with the ideas like wait for a sale, buy a bag of candy instead of just 1 bar from the vending machine, bring her own bottle of water to places, pack her own lunch to school, clip coupons, put money aside and save up for something she really wants but does not have the funds immediately.

She just graduated college and while living with roommates in an apartment spent way less than her roommates. She shopped smart for groceries and cooked most of her own meals (she makes great lasagna!), bought text books at a fraction of the cost finding many online for free, etc.

elpgal

Veteran

Una, the thing I learned from grocery shopping was not just money saving but getting value for money. By the time I was in high school, my parents trusted me with doing all the routine grocery shopping for my family.

texstyle

(website)

Veteran

Some great tips here already...I can't remember his age but I remember my dad taking me to open a savings account when I was pretty young. I used to also play "business" a lot, setting up a pretend office with pretend customers and invoices. I don't love doing taxes or forms, but that early experience of it being viewed as "fun" instead of as drudgery, helped me throughout life. Also, teaching to simply respect money (and I do mean the physical object), such as not just cramming a wad of bills in one's purse/pocket, but carefully counting it and organizing it, and knowing at any given time how much one has, can go a long way to instilling this idea.

catgirl

Veteran

These are great suggestions! I think the allowance is a good one. We haven't tied it to chores because I feel that is part of being a family. DS is 12 and does his laundry, cleans his bathroom, feeds the pets, takes out the trash, etc. We have been bad about an allowance, instead randomly buying him certain things he asks for but explaining why others have to wait till a special occasion.

I could use some of these tips myself!

Kim

Veteran

No reason why you can't tie allowance to his family chores, yes, it's expected of him, but we all get rewarded for doing things and this is probably the only way that will happen for him at his age. (Until he's old enough to get a job.) There's always the opportunity for "extra" work too.

Also, making sure he has his own money, and decides what to spend it on is important. You don't have to ask your boss when you want to buy a pair of shoes, right? He needs some "mad money" so he can buy that electronic game you think is crazy expensive, but all his friends have. By letting him decide, save up for, give up other things for, buy, (and then possibly regret it) you are letting him learn some very valuable lessons. If you are feeling very brave you might even go so far as to give him his clothing allowance for the season (or the year) and see how he does with it. The thing to remember is for you and dh to resist the urge to "save" him from his choices. THAT'S where all the real learning happens. He spent all his money on a cool pair of shoes, but "forgot" to buy underwear? Hmmmm. That's too bad.... What's he going to do about that? (Let him solve the problem or live with the consequence of his choice.) You hand out no more money til the appointed time (next season?)

A few mistakes with his money at this age while the stakes are not high will much better prepare him for his future.

KikiG

Veteran

The problem with linking money to chores is that a kid wired a certain way will just say, "Ok, then I opt out of money AND chores."

I think kids need a limited amount of pocket money so they can opt for the sugary drink or kid's meal or low-value "booster pack" of some card game that comes in foil that you are absolutely not going to buy them. I think that wasting that money helps them, eventually, learn to make choices so that they will make better choices when they earn money.

Recently, I gave my son (age 18, senior in HS) X amount of money for a weekend activity related to school. He put in a big chunk of it as a gift for an adult sponsor, and asked me to reimburse him for the gift. Nope, I said, I gave him X for the activity, if he allocated Y to the gift, that was his choice, and that was that. And he dealt with having made that choice. Now that he has a little job, he's actually being very thoughtful about anticipating expenses. He's already ordered my Mother's Day gift, LOL!

Gaylene

Veteran

We opted to not tie an allowance to family chores for the same reason--chores are part of being a family, not paid employment.

We handed out an allowance on a weekly basis after explaining how "personal" money fit into overall family budget. That explanation seemed to naturally flow into sharing more details about how we set up our household finances and allocated money as time went on. We never put restrictions or debits on the allowance since we (1) wanted to teach money management through experience instead of control, and (2) chose not to tie money to rewarding and punishing behaviour.

Extra help could lead to extra cash. When our son dearly wanted a particular item, we explained how he could do extra tasks for us, and for others, to earn more money. We were careful, though, not to turn his altruistic actions (like shoveling a sidewalk for an elderly neighbour) into an opportunity for cash. He did, however, get "hired" to dig up and help plant a garden for our neighbour. He also made extra pocket money by collecting bottles and other recycling in the neighbourhood.

Seems to have worked. He and wife made a 35% downpayment on their first home from money they had saved.

catgirl

Veteran

Kim, I think extra chores for money is a great idea. As KikiG says, my son is the type to say "I'm fine with no money and not doing chores". to me chores are a separate lesson in being part of a family unit. But there are no end of things he could do - MY chores, for instance - to earn spending money!

deb

Veteran

I went through a divorce when my kids were that age and money was very tight. My son made a long distance call to a friend and my phone bill was outrageous. I sat my two children down. Showed them my paycheck and the bills and had them help me pay the bills. I only got paid once a month and the left over $$ had to last all month. It was a real eye opener for them. They would help decide which school activities each would attend that month and which one need clothing more than the other. Once they turned 15 they got after school jobs and that money was for anything they wanted to spend it on. My daughter was and still is very good with her money. My son, not so much. But he has gotten better in his 30's.

Kim

Veteran

Yes, there's no end to the "extra" chores, especially if they are YOURS! Win, win!

Traci

Veteran

One of the best lessons in finances we taught my daughter was when she turned 14 we had her start saving to buy her own car. She saved allowances and baby sitting money and bought a tiny, little old car that some of her friends now call the "hellmobile". But she beams with pride, and impresses all her friends when she tells them she bought it herself.

Some kids even told her it was mean of us to make her buy her own car and pay for her own gas, but she really liked it.

We're also pretty open about family finances. We tightened our budget a couple of years ago and we sat down as a family and talked about things like what we wanted our grocery and eating out budget to be and what things we were willing to sacrifice and what things we didn't want to give up. After this exercise the kids were totally understanding when I'd say we'd already had out eat out for the week and couldn't grab starbucks.

Deborah

Veteran

Una I haven't read the other responses and I don't want to assume, but I am guessing that your DS, like mine, being a single child, possibly has a pretty good life and is able to have most things he wants. For me, the challenge lies in having my DS understand that he is privileged but not entitled. He gets an allowance which is attached to a series of 'chores'. We talk openly about our budget and include him. If we are having a period were we need to tighten our belts a little, we share that with him. We are planning on opening a bank account in the next few weeks for him and he will bank half his weekly allowance and spend/keep the other half. The other thing that has definitely been helpful in teaching him to value what he has is taking him along and having him participate in my community projects. I also share stories about the situations I come across in my work. DS has helped at the community meals I have run, and met people (and kids) who live life very differently to him.

We have also found giving him some financial responsibility has been very positive.

Recently, we agreed that DS could have a mobile phone and gave him my old one. He pays for his monthly phone service. It's a $20.00 per month pre paid thing and not once has he not had the money saved and put away to pay his bill

Also, as you know Valentine's Day is coming up and DS wanted to buy a little gift and card for a 'girl' friend he is a little 'sweet' on. He saved money out of his allowance and paid for a card and cute little bear to give her.

catgirl

Veteran

Deborah, I think we have very similar kids and approaches. I recently went to the bank with DS and got $300 in $1 bills. We have an envelope and for every day he does everything he should without being told more than once (or not at all) - homework, chores, good attitude - a dollar goes in the envelope. When he earns the full $200 it will go to a phone with limited service, and he will have to earn the money to pay the bill.

These are very helpful tips and also for setting reasonable expectations. He doesn't actually want a lot but what he does want is expensive!