Mother Knows Best: 5 Ways to Teach Your Kids About Money

Recession talk is everywhere, even on Mother's Day. At work, at home, at the supermarket, at the library, at soccer games, and on play dates. Everyone hates this recession, and most everyone is being affected by it. Especially mothers. Why? Because we are on the front line of the budget wars.

Let's face it, as far as we have come in our efforts to shore up equality among the genders, moms are still largely in charge of household budgets for food, clothes, birthday presents, discretionary items, track-team uniforms, new tennis rackets, and so on. So when the economy heads south and prices go north, it's mom who usually decides what the family can do without.

But instead of being the financial heavy on this day of all days, look for the silver lining: An opportunity to teach our children about financial responsibility. Maybe you've had to tighten your monthly budget or take a less expensive vacation, stay in and cook rather than eat out, forego new additions to your summer wardrobe or your house. Instead of just saying “no” without explanation or example, use the recession as an educational tool.

Here are some practical things you can do with your children from ages 4 to 18 to teach them about the value of money.

Age 4: Dollars and Sense
Most four-year-olds can count, recognize letters and numbers; some have even started to read. What better time to introduce the concepts of an allowance, spending and saving? A couple of books, The Berenstain Bears Dollars and Sense and Alexander Who Used to Be Rich Last Sunday, illustrate just how quickly that weekly payout can burn a hole in your pocket if you're not careful.

Age 7: Amortize Your Cherries
The next time you're in the supermarket with your kids during cherry season, buy a pound without choking on the price. That's what Fran of Dallas, TX used to do. Then, when her hungry offspring started scarfing down the cherries, she would point out that they could either eat them all at once and have no more for a long while (with a gentle reminder of the price), or they could eat just a few cherries at a time and enjoy them for several days.

You can also ask your children to help pay for those things they really want out of their allowance. They seem to have a better understanding of the value of money when they're spending their own.

Age 12: Future Entrepreneur
Encourage your child to start her own business. What better way to understand the ins and outs of cash flow? Some jobs for a 12-year-old include dog-walking, plant & animal care, mother's helper, gardening and more. You'll find that kids get more excited about earning money — and saving it for something special — when the enterprise and the earning power is theirs alone.

Age 15: Checks and Balances
Take your son or daughter to the bank and have them open their very first checking and savings accounts. Remind them to bring cash or a birthday check to deposit — half in savings and half in checking. And then remind them that when the checking account runs dry, they'll probably be paying a monthly maintenance fee until they put more money into the account. Just a little incentive to spend more thoughtfully.

Age 18: You Can Never Go Home Again…
At 18, let your kids know that after college, they're not allowed to move back in. Shelly of Philadelphia, PA told her daughters that when they graduated from college, there would be no moving back in with mom. Once they were done with school, they were on their own, because she respected their ability to find their own way.

“I told them that my love was deep and constant, but that nudging them out of the nest to deal with life on their own would prepare them for anything that came along,” Shelly says. “Roots and wings are the most precious gift a parent can give.” Maybe you can't go home again, but you can always stop by, have dinner and do your laundry.

Be an Example
Kids can learn the value of money at pretty much any age. It just takes some thought, a little effort and plenty of credibility. That means we, as mothers, need to practice what we teach. If we expect our children to tread the path of good money sense and fiscal responsibility, then we have to set the example. Starting today, the day when we all celebrate our mothers and what they have done for us. How hard can it be?

Okay, it may be hard. But the payoff will be a whole generation of kids who know how and when to save and spend — thanks to Mom.

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Carl Marx
Carl Marx
11 years ago

I like the article and the basic content of this article. More kids should be brought up to have some “money scene”. My experience is that one should treat each child as an individual and expose him or her to various aspects of money and business at an age that suits the individual. When my two daughters were around 6 and 8 respectively we decided to start showing them what business was about and that money has some value and can be increased. Instead of giving each of them an allowance (which I believe only prepares them for a salaried… Read more »

td
td
11 years ago

Good article, although I would suggest teaching them about the benefits of online bank accounts – namely, higher interest rates- and using accounts with no fees, ATM fee rebates, etc.

Also, in this day an age, when finding a job is far more difficult for a college grad, not allowing them to move back seems a bit harsher than normal. The job market is much tighter than it used to be, and competition is much greater.

Joey
Joey
11 years ago

The age 18 rule is a great way to ensure your future 40-year-old will send you to a home (and not the one s/he’s living in) when you’re judged no longer able to live independently. This is the kind of self-reliant pull-yourself-up-by-your bootstraps nonsense that the rest of the world recognizes as selfishness.

Kyle
Kyle
11 years ago

I also have to disagree with the “never let them move back in” thing. I moved in with my father, stepmother, and younger (step)sister for about a year when I moved back to the Boston area after several years going to school and working in Virginia. It was mostly a positive experience – living with my father gave me a lot of leeway and freedom to make decisions that made more sense for me long term, and I got to know my stepmother and sister better (my father remarried while I was in college). I did pay a nominal rent.… Read more »

Baker @ ManVsDebt
Baker @ ManVsDebt
11 years ago

Although my daughter is only 13 months, this certainly got me thinking about exposing her to sound financial advice at different parts in her life.

It’s fun to think ahead and dream/plan this kind of stuff. Thanks for the chance to do so!

Steven@HundredGoals.com
11 years ago

“Roots and wings are the most precious gift a parent can give.”

I really like that quote, it sums parenting up very well. Great article.

MatildaLjungberg
MatildaLjungberg
11 years ago

“At 18, let your kids know that after college, they’re not allowed to move back in.”

I think that’s one of the coldest things I’ve ever heard.

Midlifemama
Midlifemama
11 years ago

As someone whose parents allowed her to move back in with them, I have to disagree heartily with td, joey and others who think that not letting one’s children move back in as adults is a bad, harsh idea. At the age of 29, I left New York and moved in the with parents (in Houston) because I was aimless, jobless, etc. And I stayed too long. Thankfully, I ended up getting a career and getting it together, but it wasn’t because my parents encouraged, pushed or laid down rules. Had they prepared me better when I was younger for… Read more »

Sarah
Sarah
11 years ago

I play some of my favorite financial podcasts out loud in the morning while my sons are lounging eating breakfast before school. They have come to enjoy them and don’t think of it as learning!!

Karen
Karen
11 years ago

The “you can never go home again” does seem to be more about teaching independence than good financial sense. If there is room in the family home (and you get on well with the rest of the family) then why teach kids it is sensible to pay expensive rents?

In many parts of the world this logic would just seem crazy. So extravagant and so individualist.

Carrie
Carrie
11 years ago

not letting your kids move back home after college is a great way to force them in to debt. especially if your family is in a high cost of living area and the economy is such that it’s hard to find a job right away.

Michele
Michele
11 years ago

Maybe in some cultures it’s awesome to kick your kids out after you’re done with them, but this would never fly in my Hispanic family. We all take care of each other, and are independent as well.

I hate the implication that people who stay home are not independent. It’s simply not true.

Tyler Karaszewski
Tyler Karaszewski
11 years ago

The first four rules on this list seem pretty arbitrary. The last one is potentially destructive for families, and absolutely culturally irrelevant for many people. If my parents hadn’t let my brother come home and stay with them after college, he would have ended up living in Iowa, where he went to school, rather than back in California where the rest of the family lives. The parents of most of my friends from Asian backgrounds would think “you can’t come home after college” to be completely insane, because traditionally children leave home in those cultures when the get married, not… Read more »

Richard
Richard
11 years ago

I also disagree with the move out at 18 thing. My brother was ‘forced’ to be out on his own during a poor economic time and took a job outside his degree. Once this happened, he was so focused on this new job and surviving financially, it took him 3+ years to get a job in his field that paid him a salary he could live off of. I on the other hand, fought my parents decision on this and was allowed to move back in. I was able to focus on getting a job and was able to prepare… Read more »

AC
AC
11 years ago

I completely disagree with the “never let them move back in”. It IS very cold. I moved back in with my parents and stayed for a couple years (until I got married) and was able to save a significant amount to put toward our first home. Now 2 years later we are completely debt free. Not to shabby for a 30 year old whose parents let her move back in after school.

Brenda
Brenda
11 years ago

Agreeing with many others that the ‘Age 18’ rule is a bad one. There really is no “one-size-fits-all” for cases that force adult kids to move back in with their parents. A few years ago, I found myself divorced, over several thousand dollars in debt that my ex had racked up, and unable to afford to be able to continue living in Southern California. My wonderful loving parents graciously let me move back in with them in their home in Utah, and I spent just under 2 years there, repaying the debt, saving and getting back on my feet. I’m… Read more »

dreamin2u
dreamin2u
11 years ago

It seems like everyone has an opinion about the “not moving back in” rule..so here’s my suggestion too. Perhaps a better alternative would be to make it clear that if a child does move back in that A)they will pay a reasonable rent. (I personally favor looking in the local paper for room-mate situations and rooms for rent to determine the amount) B)that it is only temporary and C)Housework is shared by all unless THEY are paying for the maid, gardener etc.. A final thought on what I would do if it were my child: Put a percentage of the… Read more »

James
James
11 years ago

The author of the article has some cultural-biased — most likely a Caucasian in America. To many Southeast Asian refugees, Mexicans, African refugees/immigrants, etc, in AMERICA — the whole thought “Not moving in with parents” is laughable and outright mean. For many, they live in a “collective/family oriented” mindset, where as middle-class/rich White folks in America have a “independent/individulistic/ultra-freedom” mindset. I work with a lot of minorities — and many of these parents came to America, with no understanding of English, yet alone financial sense. Worse yet, they have not graduated to an equaivalent of a high school here. A… Read more »

Miel @ dinkfinance
Miel @ dinkfinance
11 years ago

Great post! I think it is practical and a great reminder of the things you can do to help your kids. I think there is also another important way to teach kids about finances. Get a job. Having kids earn their way early is a great lesson in life. This in fact starts early on with just sharing household duties to get a good work ethic started early on. As for the 18 year old rule, I’d say it has more to do with financial autonomy rather than where the kid lives per se. I’ve known since the moment I… Read more »

April411
April411
11 years ago

This article had some good suggestions but I also disagree with kicking your kids out at age 18. As long as I have the space, I would let my daughter stay with me. Although, I would expect her to work or contribute to the household in some way.

Michele
Michele
11 years ago

@James #18

You make some good points, but I feel that your overall message is that minorities keep living with parents because they’re poor, and that’s not always it either. Many of my friends do have the financial ability to move out upon graduation, but they don’t want to, and their parents don’t want them to either. These are people with 50K-70K yearly salaries, too.

But you’re right, it is a complex issue, and the treatment this article took to it is laughable.

Ken
Ken
11 years ago

AWFUL advice to have kids banned from moving back in after college.

My parents charged me a small fee every month to stay, and unbeknownst to me stocked it away into an account to help me later on down the road. After one year living with them I moved out with no debt, $36k of my own money saved, plus over 2500 they had put together of money I paid them.

dreamin2u
dreamin2u
11 years ago

I apologize for forgetting where I came from. While the huge majority of the people following these blogs are white and middle class, some of us are poor and/or minorities. Many years ago I lived in a boarding house in a really poor section of Atlanta (Known as “Cabbagetown”). During the summer my 8 year old daughter spent many weeks with me. She had chores to do around the house which included helping care for a 40 year old man with severe cerebral palsey. She also had a charge account at the local “ghetto store” with a limit of 20… Read more »

NatalieMac
NatalieMac
11 years ago

Like many here, I have my doubts about that ‘never move back in’ thing. That was my parents’ policy, except it was high school graduation that was the deadline, not our 18th birthdays. We each received a set of luggage as our high school graduation gift and were sent on our way. Certainly it encouraged me to be independent and dedicated to improving my life from the very beginning, but it also forced me to make some bad decisions, like getting married at 19 and getting myself into some serious debt that I probably wouldn’t have made otherwise. It certainly… Read more »

david
david
11 years ago

Okay, okay, I hear the cultural arguments, and maybe “encouraging” kids to go it alone after college would have gone over better than “forcing”… BUT, I’ve seen far too many kids shirk financial responsibility far too late in life. At some point in history, people were considered adults in their early teens. That seems to be slipping later and later. Where do we draw the line? I think college graduation is an ideal place. After 4 years of living out of the house during college (that we’ve probably paid for), kids are at a good point in their lives to… Read more »

Aman@BullsBattleBears
11 years ago

although I agree with some of those points, that age 18 tip has to be one of the craziest ones yet…it might fly in some cultures, but in my family, there was nothing like that..instead there was a support system. When I finished college I did move back home before deciding on which school I wanted to do my masters at. Without their support I would have probably taken the first lame job my way and I would be sinking in debt.

Mary@FrugalToRich.com
11 years ago

Great post, Amanda! As the mother of 2 children that are now financially independent college graduates, I agree completely that a big part of our jobs as parents is to teach financial responsibility to our kids. I believe Moms in particular can fall into the trap of being too soft on our children and that simply creates adults that are weak and dependent. Someday we will be dead & gone and then how will they know how to manage if we have coddled and babied them? That is not good parenting! An integral part of their financial education needs to… Read more »

Amanda Steinberg
Amanda Steinberg
11 years ago

Amanda, the author, here. If I shared with Shelly these comments (the mother I interviewed for point #5), she’d be horrified. As the writer, we didn’t intend this as one-size-fits-all advice; we simply intended to spark ideas for parents looking for new ways to teach their children about financial responsibility. Looking back, I shouldn’t have said “never.” There are thousands of legitimate reasons kids need to move back home as adults, especially in this economy. Yes @James, in retrospect, this post is very culturally-biased. Noted. But, I was drawn to Shelly’s advice because I do see many young adults in… Read more »

Hogan
Hogan
11 years ago

I was told by my mother at age sixteen that she and my stepfather would support me through my first college degree, and that was it. No moving home after college, and no financial support. It was going to be up to me to use my college time wisely (or not), but the clock was ticking. That little talk scared the heck out of me and I got busy RIGHT away. I interned and worked six million different jobs all through college, and by the end of it I was offered a fulltime job as a reporter for the local… Read more »

Nancy L.
Nancy L.
11 years ago

Everybody is talking about the 18 year old advice. Perhaps because I’m in the midst of it right now, I find the 7 year old advice lacking as well. The method of using the cherries (or whatever treat) is a very roundabout method to convey the idea of not wasting all of a limited resource immediately. In a home with multiple children, the issue is that the cherries are a shared resource. Rationing only works as long as all the kids agree to it. As soon as one kid (or the spouse who doesn’t know it’s a ‘teachable moment’) goes… Read more »

Margo
Margo
11 years ago

I think you can be flexible about when to kick the kids out of the nest, but beyond 2 years out of the last diploma or degree completed is excessive.

“Move out when you’re married” made sense when people got married between 19 and 25. Isn’t Italy having a crisis of “failure to launch” with a large portion of 30-something guys still living at home?

Elizabeth
Elizabeth
11 years ago

Telling your kid that they can never move back in is like saying “you can’t have sex until you’re married” or “you can’t drink until you’re 21.” My parents always told me they’d be disappointed in me if I did certain things, but they always made it clear that if I needed birth control or a ride home after drinking or to move back in with them or some other thing – they would be there for me. Guess what — I never needed those things because I didn’t want to disappoint them. They key is communication and ultimately looking… Read more »

Sakoro
Sakoro
11 years ago

There are many countries and cultures where it is common for adult children to live with their parents until they can afford a down payment on their own house. However, in most cases the adult children are not living there for free and being provided for like when they were minors; they pay their parents rent and contribute towards groceries and utilities. In areas with expensive housing, I think this makes a lot of sense. It gives the kids a little bit of a helping hand while giving them the skills to budget and function as adults in the real… Read more »

Jacqueline
Jacqueline
11 years ago

Assuming that your children will move out at age 18 and never return is very biased culturally and is extremely offensive to many people from other cultures.

Amanda, you *should* share commenters’ reactions with Shelly, so that you can both realize how much you both are coming off as insensitive, close-minded asses.

Robyn
Robyn
11 years ago

Well I enjoyed this article, and find some of the advice to be sound, I do not like the 7 year old advice at all. First off, I would not treat cherries, or any fruit or veggies as a treat. I think fruits and vegetables should always be available to kids and should not be viewed as treats. Candy is a treat. Cake is a treat. Cherries are not treats. Secondly, I believe there are FAR better ways to teach your kids about delayed gratification than through food. Americans are already so food obsessed, we eat too much or too… Read more »

Victoria
Victoria
11 years ago

Wow….Amanda, you are so off! Things are not always easy but remember that not all your children may turn out exactly as you’d wish. As a mother, please, keep the door open. Your kids, as grown ups, might fall on hard times and need to move back home in order to re-strategise. (I know people in this part of the world are always thinking, ‘It’s all about me…I need my money to be spent on me and my stuff..’ Today is mother’s day and you have come off as one of those ‘crazy American mothers.’ Things may not always be… Read more »

Cyllya
Cyllya
11 years ago

The forced-out-after-college advice doesn’t even seem to have any point to me. If your kid tries to be a selfish bum freeloading off you during his adulthood, I think it’s because of stuff that happened before college. If a person did such a bad job of teaching their kid about money (and/or morals) that that’s the result, I don’t think they’re a great source of advice on teaching your kid about money. As for the related idea of parents secretly saving a portion of rent and giving it back when the child moves out… I’d be pretty insulted if my… Read more »

Tanya
Tanya
11 years ago

Shelly is wrong, wrong, wrong with the message she is sending her children by “cutting the cord” after college.

As horrified as I am sure she will be, I hope you share the reader comments with her, lest she send her children out into the world with a mountain of debt and a cold dose of reality. There’s no ‘undo’ button in parenting.

Benjamin Lee
Benjamin Lee
11 years ago

I believe in this:-
#1: Pay the kids for their extra efforts.
#2: Get them to buy things on their own money.
#3: Practice giving and donation.

Tanya
Tanya
11 years ago

Shelly is wrong, wrong, wrong with the message she is sending her children by “cutting the cord” after college.

As horrified as I am sure she will be, I hope you share the reader comments with her, lest she send her children out into the world with a mountain of debt and a cold dose of reality. There’s no ‘undo’ button in parenting.
Sorry, forgot to add great post! Can’t wait to see your next post!

Jason
Jason
11 years ago

I will comment on how tired I am of hearing the term “war” used to describe so many things — we have mommy wars, budget wars, sexual wars, culture wars, not to mention wars in Iraq and Afghanistan. Can authors break out the thesaurus and find another adjective to describe these types of things? War implies a battle with casualties, injuries and generally something horrible. I’m hoping that making a budget is more of a negotiation or a dialogue. If it’s a tough month, it’s a difficult conversation or a tight budget. But it’s certainly not a war. Also, I’ll… Read more »

Neil
Neil
11 years ago

Hi

I think the advice about giving your young children an allowance is great. My daughter used to be a nuisance every time we went into a shop, asking for me to buy her little things. Since we gave her an allowance she is very carful how she spends her money 🙂

quinsy
quinsy
11 years ago

@ Robyn #35: are you sure? I think cherries and all fruits and veggies ARE a treat! Yum! And as a physician, I wish more parents would give their kids cherries as a treat instead of McDonald’s and soda and candy. I can’t argue with the statement that candy is a treat, I love it dearly myself, but my mother never bought me a candy bar as a treat, never. And I am thankful for that! Because now I am an adult who never buys candy as a treat. Unfortunately I was a picky eater as a child and never… Read more »

Jon
Jon
11 years ago

Just wanted to add something about — of course — the 18 rule. Many of the commenters sound pretty critical of the American “hyper freedom” individualistic self-reliant mindset and they think it’s mean to kick kids out of the house. Well I agree almost completely but I also understand a little bit of the necessity. One of the major reasons is the way houses are built in America. Just about everything is a single family home designed to house a SINGLE family. There’s only one kitchen. There are generally no boundaries between floors. There is absolutely no privacy in the… Read more »

L
L
11 years ago

Wow I can’t believe the reactions to this post; calling the author an “insensitive ass”? Perhaps her phrasing wasn’t the best but I happen to agree that children should be encouraged to find their own way unless circumstances are such that moving out would be nearly impossible. I was allowed home every summer during uni but the understanding was that I should try and make my own way afterwards; at the same time I know my parents would have helped me out if needed. OTOH my brother took advantage of this and, at age 31, is still at home paying… Read more »

Melissa
Melissa
11 years ago

Another disagreement with never letting a kid move back home. I won’t let them sponge off me indefinitely while making no progress towards financial independence, but I’m not going to let my kid wreck their credit by living off credit cards just because they need a place to stay for a few months while looking for a job. Families help each other.

Karen
Karen
11 years ago

Just saw this quote, via the Tomorrow Museum. It seems appropriate.

“The French and Italians are encouraged to live at home as long as possible. In England, kids are pushed to leave early and that creates a humor, edge, and early floozy mentality.” – Malcolm McLaren

Ulrike
Ulrike
11 years ago

@david “Where do we draw the line?” Well, how about with a little common sense. Your 22 year old, recent grad has been job hunting for months, and still hasn’t found a “real job”. She’s working part time for pocket money, but she can’t stay in the dorms after graduation. Is it unreasonable for her to move back home for a few months while she’s job hunting? Your 28 year old son is getting out of the military. His last duty station was overseas, and while he was able to find a job in the civilian sector, house hunting from… Read more »

Stephanie
Stephanie
11 years ago

I viewed the “you can’t come home again” as a general “I will not be providing economic outpatient care” thing. Otherwise known as chapter 5 of The Millionaire Next Door.

Why? Because when you think you are helping, you are really hindering your adult child’s financial maturity by teaching him or her to depend on handouts. Read the chapter.

Obviously the exact details will depend on the particular family and the culture. But the concept is pretty sound.

mhb
mhb
11 years ago

Like #32, Elizabeth, my parents made it clear that: a) As long as they’re alive, I won’t be without a roof over my head, BUT b) If I have to live with them for more than a few months and am unable to care for myself, something’s wrong, and they will be grossly disappointed in me. The last time I lived with them was 5 years ago, when I was between jobs after college, for 3 months. Like Elizabeth, I don’t want to disappoint my folks. At the same time, the economic situation 5 years ago was much more positive…… Read more »

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