Personal Finance for Kids

tmare_IHB

tmare_IHB

New member
As my oldest child is now turning 5 and seems ready for some of the bigger ideas surrounding money and responsibility, I am wondering how the financially savvy IHB'ers



with kids have handled the area of teaching their children about money. Please share your ideas as well as your own strategies for saving for college and the other parts



of life. Personally, I did my Master's thesis on teaching financial literacy in schools but many years later I am now faced with teaching these things as a parent and I am



willing to listen to all advice and suggestions that come from the real life experience of successful people. These kids are going to be taking care of our world and we all



know how lacking the adults of this world are in this area. How do we do this well and start early enough so that our children have good habits that last a lifetime?
 
Our 5 year went on a field trip to Aquarium of the Pacific over the winter break. We put a $5 and four $1's in a ziplock bag in her backpack, for her to use as spending money. It's the first time we had ever given her real money. She came back with a plastic turtle shaped back scratcher (?) and a receipt for $1.83 including tax. Neatly tucked back into the ziplock bag was $7.17 in change.



Although we have really not given her any lessons in finance, we are now thinking it might be best if we don't at all....She clearly is already MUCH better at managing her money than her mom and dad are!
 
Teach your kids $1.99=$2.00, $2.99=$3.00....$9.99=$10.00....



They can only have gifts during Birthday and X'mas.



Only buy items on the end caps at Target and the items must have at least one red tag.



Do not allow them to spend their allowance until they can solve the quadratic equation.



Put their money into the bank and encourage them to read the monthly saving account statement in their name.



Tell them why the candies are placed at the cash register location at kids eye level.



Compare a 99 cents bag of chips near the cash register is a rip off compared to the $1.59 bag of chips 3x the size at aisle 14.
 
[quote author="bkshopr" date=1233750059]Teach your kids $1.99=$2.00, $2.99=$3.00....$9.99=$10.00....



They can only have gifts during Birthday and X'mas.



Only buy items on the end caps at Target and the items must have at least one red tag.



<strong>Do not allow them to spend their allowance until they can solve the quadratic equation.</strong>



Put their money into the bank and encourage them to read the monthly saving account statement in their name.



Tell them why the candies are placed at the cash register location at kids eye level.



Compare a 99 cents bag of chips near the cash register is a rip off compared to the $1.59 bag of chips 3x the size at aisle 14.</blockquote>


This is hilarious! Very few adults would be able to spend money if they lived in your world, bk.
 
[quote author="tmare" date=1233751153][quote author="bkshopr" date=1233750059]Teach your kids $1.99=$2.00, $2.99=$3.00....$9.99=$10.00....



They can only have gifts during Birthday and X'mas.



Only buy items on the end caps at Target and the items must have at least one red tag.



<strong>Do not allow them to spend their allowance until they can solve the quadratic equation.</strong>



Put their money into the bank and encourage them to read the monthly saving account statement in their name.



Tell them why the candies are placed at the cash register location at kids eye level.



Compare a 99 cents bag of chips near the cash register is a rip off compared to the $1.59 bag of chips 3x the size at aisle 14.</blockquote>


This is hilarious! Very few adults would be able to spend money if they lived in your world, bk.</blockquote>


Laid-back or slingback, even BK has his Kryptonite.



<img src="http://trendtechhk.com/images/P/LoungeChairOttoman.gif" alt="" />



<img src="http://www.kristopherdukes.com/images/Jimmy-Choo-Boots-Shoes.png" alt="" />
 
<img src="http://www.apartmenttherapy.com/uimages/chicago/4-17-08eamespug.jpg" alt="" />

Nobody can resist an Eames chair.
 
tmare - judging from your background it sounds like you're probably more equipped than most of us to have the right answer here. I've only been getting my toes wet with the whole kids & money thing. It started when my son (he's 5 1/2) lost his first tooth a couple weeks ago. He announced that his schoolmate gets $6 (!) per tooth from the Tooth Fairy. As the school kids compare notes on what they've received, he's already getting a taste of what it means to be keeping up with the Jones's. I was planning on only $1/tooth. I begrudgingly decided on $3. Two days later - another tooth fell out and another $3 disappeared from my wallet, as the first tooth had set precedent. His mouth has become a little cash-cow with 18 more teeth to go.



For the last few years, we've been doing a sticker / reward chart as a motivational tool. After earning a row of stickers, he would get to pick a cheap prize from the "prize box". So he learned what it meant to earn something in conjunction with using positive reinforcement for desired behaviors. But now he's no longer impressed with stickers or prizes and wants cold, hard cash. I told him if he completes one chore a day, every day for a week, he can get paid $1 on Sundays. He bargained with me and said he'd do it... for $1 per day. I said no way. He tried to talk me into $5/week. Then three. I held my ground. He finally accepted $1/week. I don't know how long this will last, though. I think he's going to ask for a raise in allowance soon.



I bought him a piggy bank and he keeps all his money in there. He takes it out every day and proudly counts it. He just showed me his $24. I asked if he'd buy me lunch, just to see his reaction. He laughed and said no. He says he doesn't want to spend it yet. He's very carefully deciding. Whenever it's Christmas or his birthday and you ask him what he wants, he says, "Something from Walmart." He has a Walmart catalog we got in the mail like six months ago that he keeps in his dresser drawer. He pulls it out everyday and stares at the pictures, all the fine and colorful toys. We don't even shop at Walmart so I don't understand why he's so fascinated. For him it's a book from which dreams are made. Believe me, he's got plenty of toys, so I don't know why the catalog is so impressive. He is so carefully choosing a purchase from one of these fine Walmart pages.



I guess I would just say to start small. Other items can be substituted for cash when they are very young and they will still get a basic idea. As it becomes real money I think it's just important that they treat it with respect. I haven't honestly decided yet if I will let him spend it all at once. I'm new at this.



Looking forward to everyone's answers.
 
Better hide this away from your kid.



<img src="http://hauteconcept.com/wp-content/uploads/2008/10/neiman-marcus-holiday-christmas-catalog-100808-1.png" alt="" />
 
[quote author="SoCal78" date=1233754755]tmare - judging from your background it sounds like you're probably more equipped than most of us to have the right answer here. I've only been getting my toes wet with the whole kids & money thing. It started when my son (he's 5 1/2) lost his first tooth a couple weeks ago. He announced that his schoolmate gets $6 (!) per tooth from the Tooth Fairy. As the school kids compare notes on what they've received, he's already getting a taste of what it means to be keeping up with the Jones's. I was planning on only $1/tooth. I begrudgingly decided on $3. Two days later - another tooth fell out and another $3 disappeared from my wallet, as the first tooth had set precedent. His mouth has become a little cash-cow with 18 more teeth to go.



For the last few years, we've been doing a sticker / reward chart as a motivational tool. After earning a row of stickers, he would get to pick a cheap prize from the "prize box". So he learned what it meant to earn something. But now he's no longer impressed with stickers or prizes and wants cold, hard cash. I told him if he completes one chore a day, every day for a week, he can get paid $1 on Sundays. He bargained with me and said he'd do it... for $1 per day. I said no way. He tried to talk me into $5/week. Then three. I held my ground. He finally accepted $1/week. I don't know how long this will last, though. I think he's going to ask for a raise in allowance soon.



I bought him a piggy bank and he keeps all his money in there. He takes it out every day and proudly counts it. He just showed me his $24. I asked if he'd buy me lunch. He laughed and said no. He says he doesn't want to spend it yet. He's very carefully deciding. Whenever it's Christmas or his birthday and you ask him what he wants, he says, "Something from Walmart." He has a Walmart catalog we got in the mail like six months ago that he keeps in his dresser drawer. He pulls it out everyday and stares at the pictures, all the fine and colorful toys. We don't even shop at Walmart so I don't understand why he's so fascinated. For him it's a book from which dreams are made. Believe me, he's got plenty of toys, so I don't know why the catalog is so impressive. He is so carefully choosing a purchase from one of these fine Walmart pages.



I guess I would just say to start small. Other items can be substituted for cash when they are very small and they will still get a basic idea. As it becomes real money I think it's just important that they treat it with respect. I haven't honestly decided yet if I will let him spend it all at once. I'm new at this.



Looking forward to everyone's answers.</blockquote>


Believe me, teaching junior high kids about money is a far cry from the four year old asking for every toy at Target, I'm not better equipped.

I have yet to hit the stage you are talking about but I'm sure it's around the corner. He's been earning tickets (like those at Chuck E. Cheese) for the past several months. I put a hundreds chart sticker on the front of a plastic container and he marks them off when he earns them, this has been costly since the prize for earning 100 tickets has been his choice, which has been video games that he plays with dad. I call Game Stop ahead of time and they ask for his tickets when we come in to buy the game (3 times). This one has worked for a while and we have several desired behaviors (including counting to 100) that have become habit now from it, but he is no longer interested. He seems to be developing an interest in money as he asks how much everything costs now. I bought a piggy bank from Toy's R Us that is divided into four categories, Save, Spend, Invest and Donate but I haven't used it yet. During my research I read a lot about taking percentages from everything earned to put into these categories or at least a few of them and I think I'll probably do that when the time comes. Most of the time I just think I am too giving him too much and probably giving the wrong idea about money, but I do it anyway :down:

I am also looking forward to everyone's responses.
 
^ Ha. About asking how much everything costs... that reminds me of my son. I take him with me to open houses, drive-by's, and such. He just got a Wii so he asks me "How many Wii's does an Irvine house cost?" I tell him about 2,500 Wii's. It just blows his mind (and hey, mine too.)
 
My son has a "Glad" and a "Sad" jar. Each night if he's been good he gets to move one jingle bell over from the Sad jar into the Glad jar. When he's bad I threaten him with moving one or more bells backward. On occasion I have done so. When he fills up the Glad jar he gets to buy a toy. So this isn't about teaching the value of money, it's about behavior.



When he asks for toys when we're at Target, often the conversation we have involves trade-offs...we talk about our budget and how we've already spent all the money in our budget for fun stuff this month.



But I have to admit this is very difficult for me and I do struggle with how to teach him this stuff effectively.



He'll be six in a few weeks and although his wisdom teeth are coming in, there is no sign yet of any loose ones. I'm not sure how much money he'll be getting for those teeth. When I was a kid, the Tooth Fairy brought me a quarter for each tooth! Guess inflation won't allow that to continue here!
 
Thank you SoCal, Tmare, and ISM for your insights on this topic as it is an interest of mine of rasing good, responsible kids in OC. Though you guys have very strong financial values and are trying teach your kids the same values, what happens if they are around very spoiled children where their parents spoil them rotten. Would that have any influence on your children in any way? No kids yet, but just curious.
 
When I was growing up I got rewarded for good grades on my report card. Back then it was a quarter for every A and a dime for every O (the citizenship grade back then).



I also would get money for doing chores on a chart. It was a way to help me save for something I wanted.



Something every parent should teach their children, when appropriate, is how to choose between paying down debt vs putting money in savings. For example, if you have a credit card balance and are being charged 18%, and have a savings account earning .5% interest, where do you put the most extra money? You would be amazed for how many folks this is not an obvious choice. There are always reasons to put money aside in savings even when you have debt, but the real lesson is the simple difference between interest charged and interest earned. I will never forget the day I was the person to teach my ex-husband this lesson. And I was more annoyed with his parents than him that day.
 
[quote author="SoCal78" date=1233754755] I told him if he completes one chore a day, every day for a week, he can get paid $1 on Sundays. He bargained with me and said he'd do it... for $1 per day. I said no way. He tried to talk me into $5/week. Then three. I held my ground. He finally accepted $1/week. I don't know how long this will last, though. I think he's going to ask for a raise in allowance soon.

</blockquote>


It sounds like it's time to teach him about deflation and the impact of the laws of supply and demand in an environment where unemployment is going up! He'll appreciate the lesson in hard-nosed bargaining when he grows up, and you'll appreciate being able to buy your own lunch.
 
[quote author="PANDA" date=1233789809]Thank you SoCal, Tmare, and ISM for your insights on this topic as it is an interest of mine of rasing good, responsible kids in OC. Though you guys have very strong financial values and are trying teach your kids the same values, what happens if they are around very spoiled children where their parents spoil them rotten. Would that have any influence on your children in any way? No kids yet, but just curious.</blockquote>


You know, I do worry about the influence of the other kids. I think the parents just have to set an example. My son knows that we have enough money (I put it in terms he can understand - like how many Wii's we make a month) but he still sees me clipping coupons or saying that I really like something but I'm not going to buy it because I like the money more. A penny saved is a penny earned.



It is interesting to see his little classmates' reaction to things. Just recently he'd been getting a lot of holes in the knees of his jeans and other pants when he's been playing - some of the pants he's only worn a few times. I thought this is ridiculous - I'm not going to go out and spend money on a new pair of pants every time he skins his knee. So I bought some iron-on patches and just did all his pants. He wears them to school and his friends ask what that is. They don't know what a patch is! We are such a disposable society. Something breaks - throw it out and buy a new one. Not in my house. No way.
 
This discussion also reminds me that we have additional responsibilities with our children that our parents never considered. We need to raise financially savvy kids and also kids who know how to protect the environment through conservation and recycling. I think the "green" ideas will probably provide us all with much more honest answers than "we don't have the money" (this one is actually a lie and kids figure that out).

Lately when my son asks for something that I don't want to buy, he'll ask me if I have the money and I say yes but mommy and daddy have decided that we should spend it on something else like food.

I'm wondering what everyone's attitude is towards allowances and chores.
 
We make it as close to the real world as possible, seems to be working well.

1. No payments for chores - they are just expected. Just like Mommy & Daddy do chores, but don't pay each other to do them. No allowance either - all the money has to be earned per #2 below, there is no automatic govt like transfer payment every week.

2. Payments for good schoolwork. Small & immediate (ie. don't wait for the report card, just pay the worksheets and tests as you go. Poorly done work gets no payment. Outstanding work gets extra payment. The kids are welcome to do extra work out of their workbooks at home, or do worksheets for the internet for extra $. This is to make it as much like the work world as possible, so it'll seem fair to them when they grow up.

3. Let them spend the money on anything they want (except, I put some limits on candy - they now have to eat all their candy before buying more candy, it was getting a bit crazy/antfest, and of course, only so much candy per day for it's just not healthy).



With this system in place, we see the following pattern as they learn about managing their money.

1. Spendaholic - blows it on everything

2. Later, when with siblings, has spenders remorse when all the other kids can buy, say a Costco pizza slice, but you have no money, so you have to eat the apple & brown bread Mom took to Costco for you.

3. Quickly learns to hold some money in reserve, just in case.

4. We point out comparison shopping (ex. you can buy that candy at the Video store for $2 - or you can way till we go to the grocery store and pay 69 cents for the same item), kids quickly get it. Now they rarely overpay for something they want, even if they really really want it - they hate the ripped off feeling.



If you find they are too motivated (ex. draining your pocketbook with all the extra work), just get super stingy when you go out shopping (ex. I'm not paying for anything with sugar in it, it's not good for you, or I only buy the really cheap stuff on sale or whatever. Then they fork out for sugary cereal, candy, pop, chocolate milk, sugary kid yogurt, or brand name, not on sale whatever themselves and are happy about it).



An interesting side effect is that they get entrepreneurial about it - ex. one kid who happens to be the only one going shopping that day will buy a snack in bulk, then divy it up into ziploc bags later the resell it to siblings at at profit.

They also exhibit generousity - ex. like to buy an item, then share it with the family. They like breadwinner "the bringing home the bacon" feeling.



Works great, the oldest kids are horders, seem to save about 70% of whatever they earn and never spend it.
 
You must log in or register to reply here.
Back
Top