We were bad with money. On the grand scale of Dinks (dual income no kids) who made a respectable combined income, we were surprisingly disrespectful of our hard earned dollars. We were impulsive, made bad decisions, made large purchases with good intentions that soon fell short of benefiting us, generally didn't give enough thought to it all. What we ended up with was a pile of things we no longer cared about, strapped to the debt that came as a horrific gift-with-purchase. And it was a long time before we were able to fight and claw our way back to the blissful world of debt free. Dave Ramsey entered our psyche, and taught us a new way of life. A life that didn’t include credit, but did create a habit of keeping our eye on the prize: “living like no one else, so that one day we could live like no one else.” During our financial revelation, our family started to take shape as well, with the birth of our little girl. During her first four years of life, while we have busy planning for her future, she has remained blissfully unaware of money, save the small, sporadic lessons at the cash register. But being painfully aware of what is coming; we have begun the semblance of a plan to teach her a level of respect for money alongside the lessons of respecting other people, emotions, material things, and herself. Kids and Money FEAT We all fight upstream on this issue. Kids today have largely benefited from their Baby Boomer and Gen X parents, and have more disposable income than some less fortunate families can even fathom. The media presents an endless barrage of opportunities for kids to part with their earned and unearned dollars…and not to the tune of 25 cents for a pack of gum, but $60 games to go with their $400 game console. These things have become possessions of status, of belonging, of necessity in some minds. Each of us will decide what is important to us, and what we will, in turn, teach our kids. So let’s not judge, let’s learn from each other. Before much more time passes, I want my kids to understand not only what money will allow them to come home from the store with, but what working hard for something feels like. The feeling of accomplishment that comes from achieving, earning, saving, and cherishing. I’m only part egotistical fool, so I understand that these are deep concepts for a 4 year old. Therefore, the biggest challenge will be to translate my adult brain concepts into ideals they can appreciate. Earning is Fun. Kids want so much to feel accomplishment…which is why they are always looking to us for reinforcement. The first and most important lesson I can teach them is that earning something makes you feel great. Have them participate in some activity outside of what is routine. Set expectations properly about what is involved, what it means to complete the task, and what they will earn upon completion. Then make it fun, and make sure they complete the job. Shower them with praise, talk about how good it feels to do a great job, and see the end result. And finally, pay them what you agreed on. Make a big production of it, too. They are going to remember the experience, and the feeling. Not Every Activity is Monetized. Something I firmly believe in is that not all activities deserve compensation. Teach your kids about things that are done simply because it is “right”, or helpful to the family. At no point do I want my daughter trying to negotiate what putting dishes in the dishwasher is worth after my wife spends two hours creating a nutritious meal for our family. Some things are done simply done out of love, membership and duty. But if my 1 year old son sets off a toy bomb in the playroom, I can easily give her the opportunity to earn by helping clean up a mess she had no part in creating. Think Outside the Box. Not every earning activity needs to be based around chores. I am a huge believer in the power of vocabulary, so my daughter earns now by learning new words and how to use them in sentences. At some point, I will transition this opportunity to include spelling those words. And what about a lemonade stand? During our feeble attempt at a garage sale last year, my daughter sold out of every cookie and every drop of lemonade long before we made HALF what she did trying to sell household goods. She understood the market, and she killed it. Saving. Here is where I can start to teach about respecting money. My kids don’t get to spend everything they earn. Without exception, they puts half of their earnings in one jar for spending money, and a no-withdrawal piggy bank for saving. My explanation of this to them is that we save half of our money for emergencies. My daughter doesn't truly understand what an emergency is yet, but in my view, it doesn’t matter. Nor does the percentage that she is saving at this point. If she earns 2 quarters, she knows the first one goes into the saving piggy, and the other goes in the spending jar. I want to develop in her a knee-jerk instinct to first put money in her savings, no matter what, that she knows she will not be able to touch. Then she is open to make decisions about the rest…with help for a while. Depending on your beliefs regarding charitable giving and tithing, you may at some point structure the saving portion to include these concepts as well. Spending. There are plenty of lessons that will be learned about spending money over the years. Some taught by me, some taught by their friends, some by the media and society in general. At this stage, I will begin to teach them about what things cost as compared to how much they have to spend, and ask them to consider if they want to spend part of their money, or all of it. I want them to also begin to think about what events are coming that may necessitate a need for money such as Christmas, a birthday, etc. Thinking forward and planning will start an undercurrent need to “budget”. In doing these things, I hope to teach them respect for their spending money, and ultimately, responsibility. Model it, Be Consistent. Trying to teach your kids respect for money will do no good if you don’t walk the walk, and walk it consistently. You probably discovered it already, they pick up everything. You will only help your kids and your family in general if you practice what you preach. Do what you can to avoid conversations later including arguments like “You don’t, why should I?” I mentioned earlier that I was part egotistical fool, and I am. I regularly believe that I can control chaos, only to be disappointed…regularly. But to just hope that my kids will learn good lessons on their own would make me ALL fool, and respecting money is one I think I can teach. Who knows…I don’t plan to let my daughter out of the house until she is thirty anyway. After she earns her money, maybe I’ll only have to teach her how to stack it. Jay Lessons is a novice ‘burb daddy, a husband-in-training, and a sarcasm specialist. You can find more of his reflective rants at HalftimeLessons.com, and Twitter @HalftimeLessons.

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  4. Love this. This is something we struggle with at our house daily…teaching kids the value of money. My first born was obsessed with money by age 4 which I truly believe is WAY TOO EARLY, but who am I? It has made it challenging to watch the other boys watch him and then get interested in it earlier and earlier. UGH. UGH. UGH.

  5. Great Post Jay! We, too, keep careful watch on what our kids get and what we spend for them. It’s hard when all their friends have Wii’s and Nintendo DS games and new bikes and… and… But we try to help them understand that it’s a choice we’re making. It’s not that we can’t afford those things, we just choose not to buy them. I don’t think our kids feel poor at all… rich in lessons, I hope.

  6. Wow, you are mature. 😉

    Once again good stuff here Jay. We are also on the Dave Ramsey bandwagon. We look back on our previous habits and lament the wasted time and money. And then we move forward. We pay our kids commissions for chores, making adjustments to what they get paid for as they get older. The walking the walk is still hard sometimes, but worth it in the end.

    I keep telling myself that the family trip to Disney that feels like it will never happen will be way better knowing it is paid for before we hit the road. It gets me through the bad days.