My Parents Never Discussed Money, But I Am Breaking That Cycle In Hopes Of Raising Money-Wise Kids

by Sarah Cottrell
Originally Published: 
iStock - PhotoInc
iStock - PhotoInc

When are parents supposed to start an allowance for kids? I hadn’t really given this question much thought, but I had assumed that it would be right around the time when my kids would be getting report cards from school (for bribing As and solid B+s) or when we started creating chore charts to tack on the fridge.

I was very sure that allowance was all about rewarding good behavior, and that my kids would have to earn their money. We’d do the piggy bank thing and figure out a rate of allowance that made sense. My only real question centered on: What’s the going rate for kids’ chores in 2017?

And then one day, a friend sent me an article published on Slate that, in a nutshell, said I was approaching allowance all wrong. According to the money experts at Slate, the time to start an allowance is “[a]s soon as your kids start asking about money, since studies show they’re already sizing other children during their preschool years. The child-development Ph.D.s who work behind the scenes at Sesame Street determined that preschool-age kids can distinguish between wants and needs […].”

This caught my attention. Money has always made me feel intensely uncomfortable because I was never taught to talk about it or handle it properly. When I first started my career, I had absolutely no idea how to negotiate a salary and ended up at a disadvantage at the bargaining table because I was too afraid to demand the money I was worth. Do I want my kids to end up feeling vulnerable like that someday? How do I teach my kids the value of money?

My husband and I got down to the brass tacks when it came to money and kids, and we started researching the hell out of what healthy money habits look like. We live paycheck to paycheck at our house, and the concept of saving money is damn near foreign to us, but we decided that it won’t be for our kids. So not only did we have to figure out how to get our kids to be comfortable around money and money talk, but at the same time, we also realized that we had quite a bit to learn about personal finance ourselves. Who knew?

To start, we followed the advice given by the Slate article. For each child, we pulled out three jars and labeled them separately as “Save,” “Donate,” or “Spend.” Then, each Friday (or as our kids like to call it, payday), we pull out a wad of one-dollar bills, and give each child the same number of dollars as the years they have been alive. That’s the rate, age equals the amount of pay, and we expect more from our older child than our youngest.

The best part about the three jars is that they reflect the values we want to teach our kids about how to view and handle money. The spending jar should contain the least amount of money because that should ideally convey that we spend money on our needs first, not our wants. The savings jar should demonstrate that they must be patient to save for something worth their time and effort, and the donation jar is there to teach them that money has the power to help and that they can make a difference in the lives of others when they use their money wisely.

Here is the catch, though: We cannot tie the allowance to performance or behavior. This was a real challenge for me at first. Allowance must happen every Friday come hell or high water. Why? Well, according to those money geniuses at Slate, “Allowance is instructional, and money is a tool for learning. We don’t yank kids’ books or art supplies when they don’t finish their chores (or don’t do them well, or whine while doing them), so we shouldn’t take money away either.” And they have a great point. If we want to truly break the cycle of crappy financial habits, we have got to start by teaching our kids that money is a tool.

We implemented all of these suggestions, and over the course of a few months, we have been absolutely astounded by the ways in which our children talk about and handle their money. This past Saturday, we allowed our kids to each take $10 out of their savings jars to buy new toys. They spent over an hour weighing the pros and cons between a Zorro pistol set with masks and badges or a new art set with neon playdough. They understood that it required months of saving before they had a sweet nest egg to dip into, and they were very careful about how they spent it. This was a surprising, and very welcome, change.

In the end, they each chose a toy, and then miracle of all miracles, after they got home, they actually took care not to lose or break their purchases. As a mother, I could not have been more proud to see my kids making smart financial choices and then taking care of their possessions as a result. I’m confident that we are on the path of breaking the cycle of financial insecurity.

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