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Lead By Example: Teach Your Kids About Saving Money

Nov02

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This is the first post in a series on teaching children about fiscal responsibility and is underwritten by our sponsor Harris Bank.

Our best conversations can happen in the car with me driving and my five-year-old buckled into the back seat with nothing else to do. We have talked about pregnancy, friendships, and marriage.

“How much money do you have?” she asked me in her pip-squeaked voice from the back seat. Today we would talk about money, apparently. How do I answer this?

“Enough,” I said and wondered if the answer would satisfy her.

“How much is that?” she persisted.

“Enough for everything our family needs and some of the things we want.” Talking about pregnancy again might have been easier.

“Do you know where money comes from?” I asked her this time.

“From the bank?”

“Yes, but before that? Where do we get the money that we put in the bank?”

“I don’t know.”

“We work and people pay us money to do that work. Then we use the money to buy food, clothes, and other things for our family.”

“Oh, I know that. You told me that before.”

I can tell we’ll be having this conversation a few times before it finally sinks in.

I hope other lessons about money will sink in through normal activities we do together. She already knows that at Target I’ll admire a toy with her,  but that doesn’t mean it’s coming home with us. I try to talk with her at the grocery store about how I decide which groceries to buy, and she sees me checking prices.

She wants to buy things herself with her own money. She’ll get to experience the satisfaction of saving up for something special and patience when she has to wait. As much as I want her to have everything she wants, I know my job is to prepare her for the world, not to always take care of her.

One time I asked readers what they learned about money from their parents. It’s always the parents’ actions that have the most impact.

From Becca: My parents taught us primarily by example. They bought used cars and kept them until they no longer were worth fixing, we rarely ate at restaurants, we did fun things together rather than buy things, and my dad did all of our car repairs and yard work himself. If we wanted a big ticket item we had to save our money for it, but we were given a dollar or two extra a couple of times a week to walk to the store and buy candy or gum. I had a great childhood and grew up with great money habits despite little intentional teaching from my parents. Now that I am married and have a child those habits have served me well.  Thanks to my simple upbringing, it is easy to resist the temptation to keep up with our neighbors.

From CF: I can’t thank my dad enough for the lessons he taught me about money. Pay yourself first, don’t buy new cars (or more generally, be mindful of items that lose a lot of value early in their life), avoid debt like the plague, the power of compound interest (start early!), not being wasteful, etc. But in the midst of all that, he also recognized the importance of quality. I remember shopping for a basketball hoop with him, and I thought for sure he would buy the wooden one that was the least expensive, but after speaking with the salesperson, he determined that the fiberglass model which was more than twice the amount was the way to go. He knew it would last longer and withstand six kids much better. I save like mad and question every purchase, but I won’t hesitate to buy quality when warranted; in some cases, it’s the more economical choice. I’m already teaching my three kids the same values – I only hope I can do half the job my dad did.

From Elizabeth: When I was young, my parents talked to me about saving my allowance and about not being able to get things because they couldn’t afford it, but it was all conceptual, so I didn’t understand. Save for what, bigger stickers? No, I’ll take these cool stickers now. And I would want a lot for Christmas thanks to the Sears catalog, and they would say they couldn’t afford it, but we got most of it anyway, so, not being able to afford something meant nothing to me. And, with the advent of marketing credit cards to college students, reality didn’t hit until many years later. I think if my parents had made their advice real, I would have been better able to understand the mechanics of finances from early on. They did everything right with their money, it just didn’t hit home to me until I made big goals of my own. For me, that was key.

From Jan: My parents have always been open about their finances with me. In junior high I had to buy my own clothes if I didn’t want to wear the perfectly good hand-me-downs, while friends were getting boat loads of new designer clothing. In high school I was taught how to budget and actually started making the grocery list to do the shopping. After graduating college I had to pay for rent to live at home until I moved out on my own which taught me to budget my money for living expenses. I appreciate the lessons now more than ever. What I thought wasn’t fair back then really helped me now. I wonder about my friends who got things handed to them on a platter. Were their parents in debt? Are they now in debt trying to achieve the same lifestyle they had as a kid?

I have just twelve years left to teach my little girl about avoiding debt, spending for value, saving and investing for the future, giving, and reconciling a bank statement. I hope that’s enough time.

What do you hope you teach your children about money?

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Thank you to our sponsor Harris Bank for underwriting this important conversation.
 

Photo credit: Thinkstock

About the author


http://smallnotebook.org
Rachel Meeks is the voice behind the popular blog Small Notebook, a resource for simplifying and organizing your home. (Because it's so much easier to be a parent when you're not surrounded by a ton of stuff.)


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11 Responses to “Lead By Example: Teach Your Kids About Saving Money”

  1. Jessica Nov 02 at 9:46 am Reply Reply

    Went back and read the old post on Small Notebook. It was interesting to think about! I can’t remember my parents talking to me about money, although they probably did. One thing that made an impact, though, was their blase attitude about stuff. I’d get worked up over a shirt or something that I wanted and my mom would sort of say ‘yes, that’s very nice’ in a bored voice and it would lose its luster. I think the emotion and tone in a parent’s voice transmits a lot of information about what’s important. Over time, that manic excitement over new stuff calmed down. As an adult, I find that the more hyper I feel when buying something, the less I probably need it. When I’m buying something that’s a good deal and I’ll use it, I usually feel calmer. There’s the occasional exception for something that’s revolutionary and awesome, or a super-fantastic price, but mostly it seems to be a pretty good guide.

  2. Heather Nov 02 at 11:10 am Reply Reply

    Our daughters have an allowance. They have responsibilities in the home and if they are not done correctly they have to pay us back for a job “not well done.” Out of their allowance they tithe, save and have spending money (10/10/80). My oldest (9), helps teach 4 year olds ballet at her ballet studio. For this we get a $20 credit on our tuition. We pocket half for the extra gas it requires for us to get her there every week and she gets paid the other half. $2.50 a week. She tithes, saves and spends from that as well. She bought herself a book 6 months ago from American Girl called “The Smart Girl’s Guide to Money.” We created a ledger for her to keep track of her income and expenses. She likes the idea of watching her “account” grow. Just this past week she discovered an opportunity to make money. She is now making bracelets and selling them to girls at the ballet studio. She made $3 this week with an order for one more. I love watching her grow in her knowledge and responsibility with money.

  3. Amy Sullivan Nov 02 at 1:07 pm Reply Reply

    Good question!

    I hope they learn not to give money too much control. I hope to teach them that living within their means (whatever their means turns out to be!) is fun and easily attainable.

  4. Michele Nov 02 at 1:10 pm Reply Reply

    A year or two ago my husband and I were at a charity dinner that held a silent auction, among other fundraising activities. One of the items for the silent auction was an Xbox. At the time, the retail price was about $500. We wrote a bid of $150. As the close of the auction drew near, we were talking to a person at our table who happened to have donated the Xbox. She was complaining that the price wasn’t being bid up enough and said she was going to bid it up herself. She knew that we had submitted the current highest price bid of $150. I mentioned that we did not have an Xbox and that Jake would be thrilled to have one.

    After a little more discussion, I realized why the price had not been bid up. Everyone else probably already had an Xbox. How in the world could a family survive without one? Don’t get me wrong. We are fortunate enough that we could have afforded one at the full price of $500. (I also understand that many, many families could not afford one at $150 much less $500.) The point is that we decided not to spend such a large amount of money on something unnecessary and relatively unproductive.

  5. MK Jorgenson Nov 02 at 1:52 pm Reply Reply

    I love that you admire toys with your daughter at Target but walk away. My daughter’s only 15-months, but I’ve started modeling this by handing her a doll or a toy to look at while we’re browsing, then putting it back on the shelf and saying “bye bye”. This doesn’t necessarily teach anything about money, but I’m hoping it will ward off the gimmies as she gets bigger.

  6. Jennie Nov 02 at 4:50 pm Reply Reply

    I think it is so important for kids to know that money doesn’t just appear in the bank.  
    Growing up, I had no concept of money, apart from the minor inconvenience of letting my parents give some to the clerk before I could have my whatever-it-was-I-wanted.  That was so detrimental to me when I grew up and I had the credit card bills in college to prove it.  
    Having to learn about spending and saving money from my husband was so much more humbling and difficult than learning it when you are five.  Lane is so lucky; even if she doesn’t quite understand, you’re laying that foundation for her, and she’ll thank you for it someday.

  7. Jen Nov 02 at 5:41 pm Reply Reply

    I still remember some 30 odd years ago making my holy communion. I received some money, I don’t remember how much. But I do remember being brought to our local building society (type of bank for mortgages), and being told that showing a good savings record would stand to me when I wanted to buy a house! There again myself and my sister have completely different attitudes to money, I’m a saver and she’s a spender.

  8. Hi Rachel,

    Came from your blog small notebook. I have 6 year old and I think he learns about money by the way we save and spend. I include him in some decision and trying to show him how budgeting or spending time works and how to save up. I am not sure if he is getting anything much, but I hope small things makes difference soon.

    Preeti

  9. MessyMom Nov 02 at 11:28 pm Reply Reply

    My 4-year-old had a phase where we could not go to the store without her expecting to take something home. Even though I know she is too young to fully understand the concept of money, I started giving her $1 per week as an allowance because she does a good job helping around the house. Now I tell her that I will buy the things she needs, like clothes, food, and her shampoo, but if she wants stuff like toys or candy she has to pay for it herself. This has dramatically reduced the amount of whining when we go to the store. She is also learning to ask, “How much is it?” because there have been times when the thing she wanted cost more than she had so she realized she couldn’t get it even with her own money.

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