Teaching kids about money

[lazysundays]

Any advice will do about starting my 2 and 4 year old off right. I was poor growing up, so I have a good handle about the value of money. Dh also respects $ because one income had to feed a family of 6. I'm actually worried that my girls will think $ is easy to come by because we all give them more than we had.

So the questions.
What so you do with all the gift cash you get for their birthdays?
Anyone buy the Dave Ramsey cartoon DVDs for kids? Are they worth it?

When the girls are older, we will definitely do thanksgiving dinner soup kitchen assistants (I was a recipient), and I always wanted to try habitat for humanity so it would be great for us all. I can see me directing the girls to volunteer work with animals or a hospital when they are teens. But what to do now?

[Apple]

I started my son off young; this is what I did...

Gift money-- he has never received much money as a gift.  For birthdays, he gets a dollar per his age (so, first birthday, $1, 16th birthday, $16, etc).  Christmas?  I can't think of any time he's been given Christmas money.  So, because he gets very little as gifts, he gets to spend all of that on whatever he wants.  I knew kids growing up who would get hundreds of dollars in cash for each birthday/Christmas.  If that was the case, I'd do it differently--save 1/3 or so for "long term", do whatever with the rest.

Earned money-- he has always had unpaid chores, but I find extra jobs for when he wants to earn money.  When he was little, he had to keep his room clean, etc, for no allowance.  But, maybe I'd have him straighten MY bookshelf for a couple dollars.  When I'd do that, he would put 1/4 into a "long term" jar that eventually got deposited into his credit union account (I opened it when he was a few months old--all the coins I get also go into his account).  1/4 would go to "short term savings", if there was a book or a game he wanted, he would use the short term savings to pay for it.  1/2 he could spend on anything.  As he got older, he pretty much added that half to the short term savings to save for a game, CD, etc.  He still does this at 16. 

The concept of the long term savings was still very foreign to him until I made him pay for a part for his car (longer story behind the car).  He went to pull it out of his savings account, and couldn't believe how much money he had in the account.  I reminded him that that is where 1/4 of his money went, along with all my change, for 16 years.  So, it really doesn't just "disappear", it is available for the big things later.

However, the best lessons came when we would go on a trip.  You have to wait until they have some concept of math for this to work, but it really was the biggest "ah ha" moment for him.  Instead of buying things for him, I would give him money and tell him that was what he had to work with, that he could buy anything he wanted, but when it was gone, it was gone.

So, trips went from "Can I have this?  Can I have that?  Will you get me that?" to "How much does that cost?  $5?  No, I only have $10 so I don't want to waste half of it on that."

The money was still given to him, but since it was HIS money, and it was a finite amount that would go away, it became a very different thing to him.  When you buy a kid a toy, there are still endless toys out there you can buy for him again.  But when you give him $20 and say "buy your own", all of a sudden, he can only buy so many toys.

I do this with things like movies too.  I will pay for him to go to the movie, but if he wants food, he has to pay for it himself.  He never buys food.

I still buy him things, and when we do big trips, I'll get him a souvenir he wants that is more expensive.  But, it has been so nice not to have a kid ask "can I have this" anymore!

[Deleted]

Clark Howard has a book about this.  I like Clark, but I have never read this book of his.

www.amazon.com/Clark-Smart-Parents-Kids-Teaching/dp/0786887796

[kadee79]

Mine had to put 1/2 of everything he earned or received into a savings account. He got to watch that savings grow. He could spend the other 1/2 any way he wanted...BUT....don't ask Mom/Dad for any money for things that are "wants" and not needs.  So he had to save his "spendable" 1/2 for the fancy jeans he wanted and the boom box, etc.!  He used his savings to buy his first car...it was a wrecked car that he worked on and restored and ended up selling it at a profit when he joined the military!

Some people set up a bunch of jars that the monies are divided into.  They include $$ for utilities, rent/mortgage, food, etc...just like a regular household budget.  And they also include one jar for TAXES!  Doing that system makes the kids aware of all the household expenses that Mom/Dad have to take care of BEFORE they can spend on "wants"!

[jitterbug]

Apple!  You could be my long lost sister!!  I gave my son a minimal allowance at that age ($2??  $5??  He's 27 now, hard to remember!) and it was up to him to purchase treats with it.  Certainly stopped the "can I have a gumball??" as we walked into a store.  When he got to school age and was at a football game and all his friends came up to their parents to get popcorn and candy money - he knew the answer was "that's what your allowance is for."  This is not money he had to earn...this was discretionary money that I would have spent on him anyway - it just put the control in HIS hands and made me not be the bad guy for saying no all the time.

When he got older - junior high age - I gave him a clothing allowance of $75 a month.  He had to buy socks, underwear, coats, shoes, etc., out of this money - everything except uniforms required for a sport.  I utilized the Visa Buxx system, which is a preloaded credit card.  Yes, it had a $15 annual fee, but money automatically transferred from my checking account to the card and it was easy to put the control in his hands.  So if he wanted American Eagle jeans and I wanted to pay for Old Navy jeans - his decision.  I knew it was working when I watched him comparison shop for clothes and buy the cheaper version.  Just one time did he buy something else with the money - and that amount got deducted from the deposit next month.

[Wisconsin Beth]

My kids both got decent amounts for Baptism gifts from assorted family.  So that started savings accounts for them.  Since then, all b-day monies rec'd go in there.  Every couple of years I do a change round up and split it between the their accounts.  And they have piggies banks at home.  They like to put money in their banks. 

We don't do allowances yet.  Not sure if we will or not.  We do talk to them somewhat about money.  And they know to put a food they want on the board for the grocery list (or have us do as they can't write yet) and I'll ask for their input on the grocery list.  And they do get told "no, it wasn't on the list" or "it's not in the budget" or "you only get McDs once this week.  Do you want it today or a different day?"  And I'm starting to have them order and hand over the money/coupon for like an ice cream cone.  They're 4.5 and almost 6. 

[mamasita99]

  My DDs (ages 10 and 14) have a debit card now through ING (Capital One 360 now). They'll ask me to check their balance before we go shopping so they can decide if they want to spend money. I put part of their allowance in their checking account, which they can spend. Then another portion goes into their savings account, which they can't spend. When the savings account hits a certain amount I transfer it over to their custodial Share Builder investment account. That account is for their future, like after college future nest egg. Something to hand over to them when they are starting out as adults. Now they are at the point where we can discuss the market a little bit, like how the money in that account was worth more or less the day before, but only if we actually take it out of the account.


When they were little, I was always really open about how I couldn't spend all of our money on x, because you also needed some for y and z. I always talked to them about saving some for "later". If they earned a dollar I would put a quarter in a bank that was for "later" and give them .75. They catch on. It's good that you are starting early, it will become habit for them.

[lazysundays]

I like your approach mama

[whoisjohngalt]

I am not going to teach any specifics until they are older.

The only thing I am doing right now is brainwashing teaching them

1.  Take care of your things bc they won't be replaced if you brake it or even if your brother breaks it
2.  You can't have everything you ask for, but I will give it a serious consideration
3.  If I said no once and you ask again - you will DEFINITELY not get it

We don't give them any cash.  My mom has given my oldest two cash and DS1 donated all to charity.  DS2 is planning to buy candy with it.  However, DS2 is a very kind kid and was willing to give all his money to DS1 when he thought he needed.

So far all the Bday monies are going into account they have no clue or understanding about.

My future plans:

1.   I have less than zero interest of paying them for doing anything around the house.  Regular or extra
2.  I am really not a big fan of allowance system, but we'll see what husband says
3.  I have less than zero interest in forcing them to divide their own money into any categories.
4.  I will be brainwashing teaching them about how I handle finances.

[yogiii]

When I was a kid I didn't get an allowance.  If I received money for my b-day or Christmas it went into a savings account.  My parents did not have a lot of money and had no problems telling me I couldn't have a toy or when I was older certain clothes.  Of course they did sometimes buy me things I wanted.  As I got older I would ask them for money, like if I was going to the mall with my friends and we were going to get pizza.  They'd typically give me $10.  I'd spend $5 and come home and give them the other $5 back.  I think I was just born naturally thrifty as I could have easily spent the other $5 on earrings or something else.  I assume they saw this in my personality and decided on the fly how to handle things with me.  When I was in high school they got me a credit card tied to their account for emergencies or approved purchases like school clothes I could pick out on my own.  In college, I used this card to buy my books.  When I graduated college I got my own credit cards.

I think I will take a similar approach with my kids.  No allowances and teaching them why they can't have everything.  I already do this with my son.  If he asks for something and I say no I give him an explanation.  I tell him we have to work to earn money and money pays for things like food, toys, clothes, our house. 

[Deleted]

We don't do allowances. Chores are a part of living in the household. If you need some cash though, there are always 'extra' jobs I'll pay for... They started mowing lawn(s) about 10 years old for cash.

Kids could always spend their gift money, and at times it's substantial. But outside Christmas and birthdays, we've never been much for buying them 'stuff'... I mean books and educational things, but games and tips were uncommon enough that my kids are still surprised and grateful when I randomly say, pick something out, or hand them a 10. 

When son started working for husband not on payroll (daughter will do a few days this year), then I took out 10% taxes (went to what would eventually.be his IRA fund) and made him do long term and short term savings, then spending. 

After going on payroll, taxes do come out, so I say 10% has to go to long term savings and let him decide how to divide spending and short term savings, or put more in long term. He hasn't gotten his tax return yet, but I intent to tell him that lumps like that are the opposite, you spend 10% and save the rest...

Im trying to be realistic, but set some kind of automatic savings as habit...

[lazysundays]

4 yo has been vying for things classmates have, so I have been telling her if you help clean up the toys we will give you some $ for it. Today, without mentioning her friends' toys, she started cleaning up the toys. I already had a cleaned out jar with label pealed off ready for her. I put two $1 bills in it to make it look more impressive. She is pleased with herself. She was more pleased that we can put a happy face magnet on the "clean up toys" part of her responsibility chart. Her baby sis woke from nap and wanted a jar. DD1 was willing to give one $1 to sis. We gave baby some coins. She loves coins. Let's see how long before she can buy something. We may have to supplement for the first reward.