Teaching Kids to Handle Money

I feel like part of a parents’ job is to plan for poverty.

Okay, maybe that’s a bit of an exaggeration.

Yet most of us hope that our children will surpass us–that they will be more successful, more leisured, more content.

While the more content part is always possible, the fact is that with the economy the way it is, it’s likely that many of our children will struggle in the future, or at least only do as well as we did. It’s very likely that at some point our kids will have little income, like everyone else, and like we did when we were starting out.

So one thing I’ve always been conscious about in my parenting is to teach my kids how to be frugal, and how not to expect that money will always be easy, or that they can always buy whatever they want. Here are some of the ways I’ve done this:

1. Start Allowances Young

When the girls were three, they started with allowances. They earned $1/week per year of age, which they had to divide up as follows: 10% tithing, 30% spend now (usually chocolate), 30% save for something they want, and 30% university. They do that with every bit of money they make, even today when my oldest makes a lot from baby-sitting and selling homemade jewellery. It’s an easy system–Spend, Save, Share.

And whenever they get money (or gift cards) for birthday or Christmas, we have them divide them up, too. If they’re gift cards, they often sell them to me, or else they take other cash they have and put it towards the savings and the tithing. So if they get an iTunes gift card for $20, they have to take $2 out of spend and put it in tithing and $6 out of spend and put it into university. Or else they just sell the $20 card to me and then they buy a separate iTunes gift card for $10 or $12! (and I put the $2 into their tithing and the $6 into their university).

Moonjar Allowance System

To Love, Honor and VacuumWith this system also came the responsibility for buying their own treats. From the time they were young, they’ve had to buy their chocolate bars and their ice cream cones. Sure we’ve bought our share, but on the whole, they know not to ask me for candy. If they do, I always reply, “did you bring your money?”. That way they learn the value of money, and that they need to think about what they spend their money on.

I have a whole chapter on teaching kids good responsibility with money in my book, To Love, Honor and Vacuum!

One thing I struggled with regarding allowances, though, was that I rarely had cash on hand to give them. And that would wreck the whole system! Or if we were out at the mall, and they wanted an ice cream, but they forgot the money, I’d say, “you have to pay me back.” But then we’d forget.

FamZooIf that’s becoming frustrating in your house, FamZoo is a great way around it. It helps you organize your allowances online, as if the kids have a virtual bank account with you. They can track their spending and saving, and it even has a savings tool where they can make goals–like saving up for an iPod–and see how long it will take. It’s awesome, and it’s got a free trial, so check it out!

2. Start Clothing Allowances Young

When my oldest turned 13, she received her clothing allowance. Now she has to keep track of her money, and all the things she’ll need to buy this year. I sat down with her in January of that year (her birthday happens to be at the beginning of the calendar year, so it’s handy), and we went over all the items of clothing she’d need. I paid for the basics: a certain number of pairs of pants, certain number of shirts, dresses, etc. And I didn’t pay a lot of money, since often we buy at thrift or second hand stores. So I gave her an allowance of about $9-$10 a shirt, for instance, not the $20 that it can cost new in a store.

And then I handed her the money (technically we deposited it into her bank account). And she made it last! She’s not doing as well this year, but then, she’s also making her own money, and soon she’ll have to dip into her own to buy her clothes. And that’s fine, if that’s where she chooses to spend her own money. At least she’s learning how to budget.

3. Charity is Non-Negotiable

I suppose it’s strange to say that we “force” charity, but we always have. We’ve demanded that they tithe, and every Christmas one of our rituals is poring over the Christmas catalogues we get from charities and dividing up the remaining charity money for that year, both theirs and ours. We pray over the needs and send it out.

And what I’ve found is that the girls are becoming generous on their own. Rebecca has frequently given away all the money in her wallet to a friend on a missions trip, or an appeal. And she’s done it cheerfully. When you raise them from the beginning to understand that it’s not our money, it’s God’s, they have a better attitude. We’ve also been to Kenya with them twice to help them to see what an African orphanage is like, so they know how much we have. And I think they get it.

4. Buy Second Hand

We buy everything second hand. We buy clothes second hand (not always, but we do check the second hand stores first). We buy cars second hand. We’re bargain lovers! We don’t need to be, but even if you have the money, why wouldn’t you try to save? It gives you more to give away!

And then the girls learn how to find a bargain when they’re older.

5. Cook Cheaply

'DSC04045.JPG' photo (c) 2008, citymama - license: http://creativecommons.org/licenses/by-nd/2.0/

One of my favourite things is teaching the girls how to cook (I began when they were 10) and helping them to figure out how much different meals cost. At every dinner we have that discussion: how much was this meal per person? It helps them to see which is an expensive meal and which is not. It also helps them to see how expensive restaurant eating is (and that’s the big failing I have as a parent. We eat out way too much). But I love cooking with leftovers, making casseroles and homemade soup. And then they see how cheaply you can get by! I have visions of them in university feeding a whole pile of friends because they’ll be two of the few who can cook, and they’ll know how to do it inexpensively.

We have a rule in our house that if you cook once, you should eat three times. So a roast should do you for three meals: one as a the roast, the next time as a pie or casserole, and the third as a soup (yes, I know that means that you have to cook three separate meals, but the MEAT should last three meals). It’s amazing how little meat you actually need when you’re making a pie with lots of veggies, or a soup with macaroni and vegetables.

We also save all the little bits that are leftover, even if it’s only a few mouthfuls of vegetables. That goes into a soup! And once a month I’ll make a soup with all the tiny little bits of different kinds of meat. It tastes fine.

I find that my children have grown up actually enjoying meals that cost very little to make. So teach your kids to cook cheaply, and most importantly, talk about how much the meals you are eating cost, so they get an idea of budgeting when they’re older.

What tips do you have about teaching kids about money? I’d love to know! Leave them in the comments!

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