Sometimes you find clues of your kids' financial education progress in the strangest places.
“Dear Santa” – began my seven-year-old daughter's letter, published in our local newspaper – “May I have more money? I will save it to buy a house or car.” (I know. I still can't believe she wrote it, either.) “I want for my brother a horse that is real…” and “For my baby brother; he needs more clothes. Can you bring my Mom and Dad more money to buy food?” (Uh, what?)
So the letter ended with her first name, but since her school is so small and her name is slightly unique, most of our friends and family knew who had written the letter. Within a few days, I got a text asking whether we had enough to eat at our house, in addition to many in-person comments. We even got a note in the mail with $5 telling us to buy a couple of loaves of bread. I thought it was funny how this got so distorted, but I wondered if I had somehow passed on the wrong message to our kids.
I don't call myself an experienced parent; but I have noticed that kids seem to pick up more what we do instead of what we say. But where did my daughter get the idea that we didn't have enough money for food?
Probably two places. First, recently, I performed an experiment for two months, in which I paid for all our groceries with cash. If we didn't have extra cash, I didn't buy the groceries. (But we always, always had more than enough to eat.) Since my kids often go grocery shopping with me, they observed me opening the envelope of cash and considering all our food purchases. I probably didn't explain that we could have purchased all of the food we wanted but that I was curious whether this affected our food budget.
Second, we used to allow the kids to buy school lunches whenever they felt like consuming breaded, processed food; but $2.60 times two kids per day, five days per week adds up … to over $100 per month! It's not that I have anything against corndog nuggets, but I thought we could pack lunches with more nutritional value at a lower cost. So I asked our kids to limit their school lunch purchases to twice per week.
This time, I thought I explained it better. “We're trying to save money with our food so we can spend the money on other things.”
To me, it made sense — but teaching your kids to be frugal is no small task. And who knows which messages they are actually internalizing?
I was discussing the challenges with one of my friends. After she listened to me babble a few minutes about how our kids are so different in their money management skills, she said, “While you can do your best to teach them, I definitely think kids are born with certain tendencies. Some kids need instant gratification, some kids can defer gratification. You know the study about the kids and the marshmallows?”
I had heard of it. Kids who delayed gratification and got two marshmallows had better life outcomes such as SAT scores and BMI measurements than the kids who wanted a marshmallow and wanted it right now.
She shrugged. “So maybe you can help them improve, but it might be really frustrating for you to expect them all to grow up to be great money managers.”
She is right. Our daughter seems to enjoy saving money. If she gets 20 bucks for a birthday present, she asks to put all or most of it in her savings account. If our other child gets money, he has to spend it. He has rarely saved more than the household-mandated 10 percent. On the other hand, he is very generous with everything he has, while our daughter keeps a close watch on her money and her toys.
As I thought about the differences between my children, I came up with my new, number one rule for raising frugal kids: Don't expect them to be super frugal; instead, help them to be more frugal than they would have been.
Tips for teaching frugal behaviors
1. One way we can help our son is to encourage him to make good frugal choices and turn them into habits. He is very good with routines and lists. Because saving 10 percent of the money he gets is a rule in our house, he has no problem doing that. He doesn't even think about it. But he would not normally make the choice to save more than is expected.
This seems advanced for an 11-year-old, but I think scheduling ways to save money (e.g., putting “call Internet provider to get lowest price” on his calendar every January when he is old enough for calls like that — yikes!) is something that would really work for him. Or when he gets a job, we could talk through what will happen when he gets a raise. Will he save his raise or slightly increase his savings rate?
2. With a child who can defer gratification (like our daughter), I think I should spend more time talking about how her actions today will improve her tomorrows. Deferring gratification just doesn't seem to take as much effort or energy from her.
3. Sometimes, being frugal requires great persistence. If money is scarce, it gets old saying no to purchases that don't fit my values or my budget. And guess what? One child is very persistent and one has something I named “challenge fatigue” where, in the face of a challenge, he gives up. My daughter's stubborn nature will probably take her far enough without too much encouragement from me, but I need to find ways to motivate my son. Creating a vision board of what he wants might work, but maybe just breaking down his financial goals into very small, easy tasks/chunks will help just as much.
4. Let them make choices while living in the safety of your own home. Just two days ago, my son spent $4.20 on a cheap plastic play kit. I gritted my teeth as he made the purchase, but beyond asking whether he thought it was a good use of his money, I kept my mouth shut.
No matter if my kids end up to be frugal adults, I hope they use their talents wisely. And I hope I can always see the benefits of each personality.
How do you teach your children to be frugal? Do you tailor your financial education to your child's personality?