Best way to teach kids about money

[Anonymous]

Would love ideas for teaching my seven and eleven year old DDs about money management. We are doing a fiscal fast in January to get our finances back on track (I'm a single mom and there were a few bumps in the road last year so need to get back on track). Would love ideas for topics to talk about, suggested books, etc. Thanks!

[Anonymous]

Check out the articles Rob Lieber wrote for The NY Times on teaching personal finance to kids. He had one on doing Save, Spend and Give (Donate) jars to teach money management that we use for our kids.

[Anonymous]

Honestly, I do a lot of my thinking about purchases out loud - that has taught DD a TON about money.

"Let's see if the bigger jar is a better option, per ounce."
"I like this sweater, but I don't like it worth $48."
"Let's check the sale section of the store first."
"Nah, this is a want, not a need."

[Anonymous]

Growing up my sister and I had clothing allowances which I think helped us learn about budgeting our money and helped my mom not always have to say yes or no to purchases- especially helpful with two teenage girls! We had a set amount for each season Fall/Winter then Spring/Summer. If we wanted to buy one more expensive item that would leave less for other things. It helped us prioritize. I think my mom bought some essentials like sneakers and winter coat separate.

[Anonymous]

When I started my kids with allowance, I required them to purchase Christmas and Birthday gifts for everyone e in the family. Then I worked with them to save and develop budgets. Also I deposit their allowance in their bank account and they have to make a decision to spend because money isn't readily available.

Like PP, I talk a lot about our spending decisions. We talk a lot about not wasting because we don't have money to throw away.

We've encouraged our kids to get jobs as soon as they are old enough. They started with odd jobs like getting neighbors mail when they go on vacation.

Finally, money goals have really helped them learn to save and budget.

[Anonymous]

Your kids are a little too young for this... but plan ahead. My DD just turned 13. I opened a "Teen spending account" for her at my bank (USAA). It is essentially a sub-account with her name on it and she is getting an ATM/Debit card. I just took her down to the bank and had her deposit all the cash she had been saving from birthdays and xmas presents (from grandparents/relatives).

The Dave Ramsey book (which I don't entirely agree with, but I do on this point) suggested that when kids are 14, the parent should give them the money for the things they need (i.e. clothes, school requirements, etc.) and then supervise the kid in using the account to pay for the things they need/want. So, I am no longer buying my kid clothes (which is mostly b/c she is so picky and I waste my time and money doing it). I will give her a certain amount of money and take her to the store and she can pick out and buy what she wants/needs.

I already showed her how to make entries in her account ledger when we made the deposit. So, I'll help her keep track of her expenses when she starts buying things. The point is to give kids supervision over managing funds and purchases while they are still home. Then when they go to college, they won't be spending like crazy with no understanding of managing and budgeting.

Dave Ramsey also suggests that kids give you a budget for the things they expect to need before you put money in their account. My DD is tight with money, so I will see what happens when we shop to help her figure out a budget for next time. My DS on the other hand, is very loose with money and would probably spend all of his clothing budget on video games... but he's only 10, so I'm not giving him a debit card or account just yet.

BTW-- DD's account is distinct from my account... it's a sub-account, but she cannot get access to the funds in my account. She has her own pot of money and that's it.

[Anonymous]

OP here, thanks for these ideas. The Ron Leiber articles look great.

[Anonymous]

I just give my kids a weekly allowance and let them figure it out. I believe in learning through lived experience.

My five year old gets $5 a week and my 3 year old gets $3. It's not payment for chores because contributing work is expected part of being in the family; they have chores but that is not tied to their allowance. The allowance is purely a money management learning tool.

We don't buy them toys often (they usually only get them at Christmas) and so when they want something they see in a store, we say, "you can buy it with your allowance if you want." Usually, they do not want to buy it then and immediately drop the subject!

There are no rules except they can't spend it on stuff we do not normally allow them to have; for example, they can't buy a ton of candy and eat it all at once. Otherwise, we have no requirements. We don't make them save any of it, or give any of it away. I feel like charity is not really meaningful in the same way if it is forced and not voluntary. Same with savings...

My older child quickly learned key concepts like (1) money that takes a long time to save can disappear quickly and (2) the money you have is all the money you have to spend (3) you can get a lot more toy for your money at thrift stores, etc., etc. He's been saving his allowance for a long time now with no apparent goal except the joy of watching the money pile up.

My younger child is more clueless when it comes to money, being only 3, but she is currently trying to save up for a giant stuffed animal that costs approximately $100. I do not know if she will meet this personal financial goal, but at least she has one and she talks about it. And, you know, it's her goal that she set for herself and she will suffer the consequences for not meeting it.

I also routinely talk openly about money, about how much things cost, and how I make decisions about money. I have explained concepts such as taxes (we all contribute money to pay for things like the police and the library), and paying for water and gas, etc.

[Anonymous]

Anonymous wrote:I just give my kids a weekly allowance and let them figure it out. I believe in learning through lived experience.

My five year old gets $5 a week and my 3 year old gets $3. It's not payment for chores because contributing work is expected part of being in the family; they have chores but that is not tied to their allowance. The allowance is purely a money management learning tool.

We don't buy them toys often (they usually only get them at Christmas) and so when they want something they see in a store, we say, "you can buy it with your allowance if you want." Usually, they do not want to buy it then and immediately drop the subject!

There are no rules except they can't spend it on stuff we do not normally allow them to have; for example, they can't buy a ton of candy and eat it all at once. Otherwise, we have no requirements. We don't make them save any of it, or give any of it away. I feel like charity is not really meaningful in the same way if it is forced and not voluntary. Same with savings...

My older child quickly learned key concepts like (1) money that takes a long time to save can disappear quickly and (2) the money you have is all the money you have to spend (3) you can get a lot more toy for your money at thrift stores, etc., etc. He's been saving his allowance for a long time now with no apparent goal except the joy of watching the money pile up.

My younger child is more clueless when it comes to money, being only 3, but she is currently trying to save up for a giant stuffed animal that costs approximately $100. I do not know if she will meet this personal financial goal, but at least she has one and she talks about it. And, you know, it's her goal that she set for herself and she will suffer the consequences for not meeting it.

I also routinely talk openly about money, about how much things cost, and how I make decisions about money. I have explained concepts such as taxes (we all contribute money to pay for things like the police and the library), and paying for water and gas, etc.

I agree with all of the above. We got our 5yo DS a three-section bank for Hanukkah: one section for spending, one for saving, and one for sharing (donating). His allowance will start this Sunday, but he divvied up the money he already had. We talked about spending/saving/sharing, and identified some causes he'd like to donate to.

He's already used $1 at a vintage toy shop to buy a stuffed silver Sonic the Hedgehog, whom he loves.

[Anonymous]

We started our girls off with their own change purses when they turned 4. Anytime they received a gift from a relative they were given that amount to spend...in cash. We explained from a young age that we would always provide for their needs. This opened the door to important conversations such as regular pencils are a need but a 10 dollar mechanical pencil is a want. They always had a bit of money as they have very generous grandparents.

As tweets and teens we gave them a budget for clothes and school supplies twice a year. They made all the decisions as long as they had everything that they were required to have.

My oldest is now 17 and has a job. She is mandated to save half of each pay for later and can spend the rest as she sees fit. She has a bank account and a debit card and even does a bit of online shopping. She also can borrow from her savings, with interst that is paid back to herself, but only one loan up to 100 dollars is allowed. We did this to teach her how interst and debt works. Interestingly, she only took out 1 loan and realized it was cheaper and better to save. This year, she will file taxes with our help.

This worked for our family mostly because we talked a lot about how to budget, what happens when you spend everything you have, and how to save. We also stand firm when they are broke and have a want.

[Anonymous]

1) Make them get a job. Doesn't need to be many hours, but needs to teach them the value of their time.

2) Make them invest. Explain that they can use their money to buy fun stuff, or they can use it to buy little machines that spit out more money (investments). Have them pick a couple little machines (ETFs for example) and follow up a year later to show them how spending X paid them Y.

[Anonymous]

I let my daughter track household budget.

[Anonymous]

^^ She's 8 yo.

[Anonymous]

At 11, you can also start teaching about meal planning and budgeting. Give her an amount like $10. Staples like flour, salt and pepper are staples and don't go towards her $10. Then look at grocery store advertisements and compare recipes.

Once she gets this down, challenge her to make enough for dinner and lunch. Or see how little she can spend to make a healthy meal.

[Anonymous]

I've also heard about adding one more category (spend, save,donate) that some families use--taxes. That is used for the betterment of home or family. So in younger kids, you might use it to pay for a family outing. In older kids, you might use it to help pay for a new roof.