Lead By Example: Teach Your Kids About Saving Money

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.
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