Kids and Money

[Anonymous]

I grew up poor, with divorced parents and I know that many of the challenges I had growing up and putting myself though college are directly related to the fact that my family didn't understand and didn't know how to teach me to use money properly. I finally have a pretty good handle on finances as an adult, but now I have a toddler. I would love to hear your best money advice or about resources for little kids. I want to make sure my son (and any other future siblings) have a better financial background than I did.

When did you start allowances?
How much do you talk about finances in front of children?
How involved in family budgeting should kids be?
What are ways I can start teaching my 2 year old about money now? (taking into account that he doesn't understand math, knows some numbers, really enjoys "8" and "14," and counts out of order frequently)

These are a few of the things I'm thinking of but I am open to hear any financial ideas for little kids.

[Anonymous]

When did you start allowances? - around 4 or 5. I started with a penny. When they understood how much a penny was and that five pennies equals one nickel, they got promoted to a nickel, then dime, them quarter, then 50 cents, then $1, then $2, etc. When they got up to $7 a week, allowance stopped. I don't believe in one dollar per each year of age. A 6 yr old has zero need for six dollars a week.
How much do you talk about finances in front of children? They do not know how much I earn or how much rent is. They know we look at the clothes on the sale rack first, and wait for things to go on sale before buying them. They know that health insurance covers the cost of a lot of going to the dentist, and what a co-pay is. I use that info to guilt them into brushing and flossing properly. They often hear me say things like "I really love this jacket, but I'm going to wait for it to go on sale" or "That looks like an okay movie, but I can wait until it's on Netflix and don't need to pay to see it in a theatre."
How involved in family budgeting should kids be? - My DD is 11 and a rising sixth grader. I am actually thinking of giving her $100 about a week after school starts next fall and saying "Use this to buy the clothes and shoes you want for the next three months" and see how she does with it. But the kids definitely do NOT help decide how much I've budgeted for food shopping or cable or transit costs, or vacations. I don't let DD know that she's going to camp on a scholarship.
What are ways I can start teaching my 2 year old about money now? (taking into account that he doesn't understand math, knows some numbers, really enjoys "8" and "14," and counts out of order frequently). I wouldn't really worry about it at that age. When my kids were that age I'd let them hand the money to the cashier but only once I could trust them not to eat or rip it. By age 3 or 4 I would hand them something and send them to go ask a cashier how much it costs and then bring me back that information.

[Anonymous]

My background for the record: I grew up in a financially sound home. We got allowance and my parents saved up and paid for college and saved up and have plenty for retirement. My parents did not start out wealthy but lived frugally and saved a lot of money. Dad worked hard to earn extra money at his job. I am grounded financially and am good at managing our family's money.

We talk about money in front of our kids. We generally have enough to do most things we want but we don't necessarily do them just because we can. We like to make special events special and not everyday events and we don't like to waste money either. So for example, if children want to go to some waterpark that's $20 per person, I will often say something like, "I'm not paying $80 to go to the water park on a holiday weekend when it's going to be very crowded when we can go during the week for half the cost or we can go when a coupon comes out." They hear things like that a lot.

If they want an expensive clothing item which I think is "not worth it" I will tell them they can receive it as a xmas or birthday gift or save for it with their allowance/birthday money. For ex: my oldest bought Uggs with her xmas/bday money. My youngest wanted Tom's which we gave her for xmas.

My kids start allowance about age 5-6. I give 25 cents for each year so a 6-year old gets $1.50 per week. My 12 year old gets $3 per week. From that money, they can do whatever they want with it - I do not force savings/spending/charity. I want them to learn to manage on their own. I do encourage savings for bigger goals. They generally buy things with this that I wouldn't buy - extra toys or candy/gum at the store, a trip to the movies with a friend, etc, games on the tablet, or expensive brand name clothing as mentioned above.

For big monetary presents - my parents give $100 for each birthday and each xmas, and an uncle gives $50 for each birthday, I let them keep part of it to spend and put the rest in a bank account in their name that I tell them is to do something or save for something big for when they are older.

I did teach them about savings and interest and explain to them why it's in the bank versus in their piggy bank.

As far as our money, they know that we are comfortable and can afford the basics plus vacations and extras, but that doesn't mean we buy whatever we want. They know we're saving to pay for their college.

They probably didn't really know much at age 2, however, we probably started talking about money more between ages 4-6.

Hope that helps some.

[Anonymous]

14:50 here. My kids also have the opportunity to earn extra money doing extra chores above and beyond what is expected of them. So if I am frantically getting ready for some company, I might pay them 50 cents to vacuum the upstairs or 25 cents to empty the dishwasher. They do have regular chores that they do not get paid for.

[Anonymous]

We started allowances in elementary school. Kids get $2/week, but of that, 50 cents goes into savings and 50 cents into charitable donations. (We collect it up and the kids direct the sort of organization they'd like it to go to.) They also get miscellaneous money over the year from relatives and spend a little of it, but most they're saving up of their own accord.

Our kids don't play a role in family budgeting, really, or know details about how much we make, how much our house is worth, etc. But we do talk a lot about simple financial decision-making, like how we'd love to get take-out again, but we already had it once over the weekend, and it's much more expensive than cooking for ourselves. It's also helpful for them to learn that money from the ATM is not free, it's our own money that we worked for and are saving in the bank!

[Anonymous]

Thank you for responding. I know that 2 is early to discuss money, but I really do want to make sure my children have a better financial understanding than I did. Helpful to know that most of you started with allowances around 5 and that you do discuss money in front of kids.

Growing up money was a source of fighting, and I think that my financial planner has had to play therapist a bit to get me to understand money as a tool, and how to develop a healthy relationship to money. I want that for my kids as well.