When I was in first grade, I had a terrible time understanding the unit on money and the concepts of counting and calculating change. I can remember sitting in my classroom, brow furrowed, gripping my No. 2 pencil, as I tried to make sense of the different sized coins. As I stared at the mimeographed worksheet, I felt frustrated that the coins weren’t ranked in value by their size. When my 6-year-old self announced that “money was stupid” and declared that I’d never use money ever, my teacher called my parents and suggested that maybe a little extra study time at home would be in order.
My father spent a rainy afternoon on the floor with me and a pile of coins trying to explain the different currencies and values. After stubbornly declaring that I thought that nickels deserved to be worth more because they are bigger than dimes, my father let out an exasperated sigh. He continued to be patient as he calmly explained money counting, and a few hours, some tears, and an ice cream to celebrate later, I had finally grasped the basics of Money 101.
And now, as I am trying to teach my own kids the value of a dollar, I understand why my dad poured a Scotch on the rocks and made it a double on that rainy night when I was 6. Teaching kids about money is hard work and helping them understand the value of a dollar can feel impossible. I also still feel that the nickel got a bum rap, but that’s a different story.
While I was able to grasp the rudimentary concepts of money counting and making change, I still struggled as an adult with budgeting and planning for my future. In college, I lived paycheck to paycheck and though I didn’t bounce any checks, my bank account was always precariously close to total and complete financial disaster.
When I met my now-husband, a man who is annoyingly adept at financial planning, I learned a ton about what it meant to be financially responsible (read: not use my available balance to buy shoes instead of paying the rent at the end of the month).
Because my learning curve was so steep and because I wanted my kids to feel more in control of their finances than I did as a young adult, my husband and I decided early on that we would teach our kids financial responsibility beyond basic money counting. We knew that arming them with useful, practical tips would help them develop lifelong good habits with money. We also knew it would curb many “Hey, Ma, can I borrow $20?” conversations when they got to be teens. Here are some of our tips:
1. Help your kids label their allowance money into categories.
We gave our kids piggy banks with compartments that say “Invest,” “Save,” “Donate,” and “Spend.” Each week, we give them their allowance in single dollar bills, and they are required to put a certain percentage of their allowance in each section. It is a very tangible way for even young children to understand that while they may have money in their pocket, not all of it can be spent on toys and video games. And they are proud of themselves when they can bring their “Donate” money to a soup kitchen or the offering plate at church.
2. Let your kids buy stocks. Really.
There’s no better way to teach your kids about the stock market than to let them participate on a small level. When the money in their “Invest” section of their piggy bank reaches a certain amount, my husband helps them buy stocks with their money. They pick companies that the kids know or stores that we frequent as a family and then track the stocks to see the progress their money is making. We talk about how the stock market works, and I won’t lie: It was pretty amusing when my son walked into Home Depot and announced, “Yeah, I own some of this joint.”
3. Have your child pay a percentage of a particular activity.
Our kids contribute 10% toward the cost of their scouting activities. The costs for scout activities (camping, outings, gear, etc) can get costly quickly and having them contribute makes them appreciate the outings all the more. We could foot the whole bill, but involving them helps them realize that extracurricular activities cost money. And they think twice about having a spending spree on toys or video games if they know that a fun camping trip is coming up. They are becoming expert budgeters due to this small contribution.
4. Let them spend their money on the stuff they want, even if you disagree.
It pains me sometimes to watch my kids painstakingly save for a frivolous item only to watch them be disappointed by buyer’s remorse, but I do it anyway. We’ve all purchased something we regret (for me, my entire wardrobe in the ’90s), but we’ve learned huge lessons in being savvy consumers. I want my kids to learn from these mistakes now, when we can talk about the feelings and issues behind impulse purchases and poor price comparison, instead of when they own a home and have real financial responsibilities.
I’m not saying our methods are perfect, and we have certainly been guilty of helping our kids dig out of a financial mistake. But we are learning as a family as we go, and it’s been a great lesson for all of us. And playing Monopoly on family game night has lead to some pretty hostile Boardwalk and Park Place takeovers by our 10-year-old. Look out Trump, she’s coming for you…