The first step to teaching our kids about money

By the time you read this, my husband and I should be in the middle of hanging out on a different continent for eight weeks — with our kids. Allow me to digress for a few sentences before I get to the point of this article.

We started the adoption process two years ago. In October, 2012, we were matched with our children, and the weeks and months since then have been filled with waiting, paperwork updates, and more waiting. Finally, in mid-April (I am writing this 11 days before we're scheduled to leave), we will meet our kids for the first time. I don't know how other new parents feel, but it's surreal to me. We're so excited (and scared)! Okay, back to the article…

What we want for our kids

During the months of waiting, we've discussed many different aspects of parenting. Of course, only one of those aspects has a place on this blog and that is, how (and why) we will teach our kids about money?

Since our kids are in elementary school, they should easily understand financial concepts. However, despite being able to understand concepts, teaching them anything feels daunting, but we do have some aspirations.

We want them to be careful with money, but not so careful that they aren't generous to others. We hope they learn that money buys choices, but it doesn't buy happiness (or, does it?). We want to teach them to save for the future, but not to forget the present. And above everything else, people are more important than money.

You're probably thinking, “Hey, Lisa, you little idealist, you. That all sounds good, it really does. But how do you do that?”

I don't know. I am new at all this parenting stuff, okay? But we have some ideas.

Ideal ideas

First, they can never observe us being cheap. Frugal, yes, but not cheap. I have two memories burned in my mind from my childhood. The first was when a relative sent me and my cousin into the store to buy some milk. Since the sale price was extended to only two gallons, we were each supposed to grab two gallons, but go to different checkout lanes.

The second thing was when I observed someone abusing a 1-800 number. The employee's daughter called her on the 1-800 line just because it was free. Saving money was a good thing, but saving money at the expense of someone else really bothered me. And still does.

We will do our best to avoid modeling cheap behavior.

We will eventually share our family's budget with them. Our parents weren't transparent about their incomes or expenses. And I am not very open about my finances, either. I have nightmares of our kids telling their friends' parents about how much money we make or spend or give.

On the other hand, we think that being transparent about our budget will have four benefits.

  • They will see that houses and cars come with a large price tag and maintaining them is expensive, too.
  • We can discuss our charitable giving and how we decide which organizations to give our money to.
  • We hope it will give them an idea on the process of running a household and being responsible with our resources.
  • We hope that looking at a budget shows them we can have anything (with careful planning and saving), but not everything we want. Delayed gratification is not an easy concept, but it makes a big difference.

Save, spend, invest, and give. With all the money they receive, they will need to save, spend (if they want to), invest, and give some away. We're not sure if they will be given an allowance yet, or if we will suggest how much they should save or give.

A balanced life is valuable. We want our kids to enjoy working and earning money. But more importantly, we want them to understand that life is short. Enjoy it.

Menu plan, grocery shop, and cook. One of my greatest adult challenges is navigating the cooking obstacle course. How can nutritious meals be prepared inexpensively? How to menu plan and shop? I thought it would be fun to have the kids each plan one meal per week and go grocery shopping with me twice a month. It would give us an opportunity to talk about inexpensive ingredients that still give us a healthy, varied diet.

Develop an appreciation for simplicity. Both my husband and I grew up in large, farming families. We rarely went out to eat or on vacation. And when we did go out to eat, we were well-behaved because we got to have restaurant food! (Of course, we also were like the Beverly Hillbillies when we were out in public, but that's beside the point.) I could go on, but you get the idea.

We have a simple, rural lifestyle that revolves around our friends and family, our little farm and the outdoors. I don't our kids to feel entitled, so we plan on working and playing together, but not give them lots of toys. But I want to. I mean, we have waited on a long time for them, so I want to give them everything they could possibly want. I just know it wouldn't be good for them.

Teach them about how money works. And finally, we want to teach them how money works. Before they graduate from high school, we want them to understand how the stock market works, what compound interest is, how to save for retirement, avoid high-interest debt, and what diversification means.

Of course, we have some other challenges ahead of us. Because we need to take care of some basic needs, it may be awhile before we can start our kids' financial education. And when we do, I don't know how our financial parenting philosophy will work out. We probably won't see the results of our investment for two or three decades. We know we don't be perfect, but we hope we're good enough.

For those of you with actual parenting experience, which types of things do you recommend? Or what worked (or didn't work) with your financial education from your parents?

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Ann
Ann
7 years ago

Glad that you have a plan. YMMV as the kids may come with some pretty deeply ingrained ideas about money from their prior experience, plus the added bonus of attachment issues. I hope your transition into family goes smoothly, and the kids don’t have too much culture shock.

SAHMama
SAHMama
7 years ago

I have three kids: 6.5 years old, almost 3 and a 5 month old baby. Only the oldest is aware of what money is. Behind the scenes, we’ve set up savings accounts and college 529s for them. On a daily basis, the middle and oldest see me doing things like making a grocery list, clipping coupons, cooking at home rather than going out, growing a small garden, giving the family haircuts, and on and on. The oldest will sometimes ask for her favorite treat (Icee drinks). I ask her if she brought her money. She has a piggy bank with… Read more »

Free Money Minute
Free Money Minute
7 years ago

Looking forward to the responses as my kids are not quite to the stage where they understand money, but they are getting close.

Squirrelers
Squirrelers
7 years ago

I like you mentioned the word GIVE. We do need to save, spend, and invest. But giving is often overlooked, and can be very fulfilling for both giver and receiver.

Also, have to admit, I smiled when I read about the 2 gallon of milk workaround. I agree that this isn’t something I would ask kids to do, but it’s something that I can appreciate nonetheless! 🙂

M
M
7 years ago
Reply to  Squirrelers

Call me cheap. but as a kid I would have SO done the milk thing! An adventure! You may be too young to remember that shopping centers used to charge to use a bathroom stall (shows my age, I guess). I was known to crawl under the door and use the loo for free.

AMW
AMW
7 years ago

Sounds like a good plan! I have a 16 and 20 year old so we have been through the majority of this already. There are only a few things I’d like to point out (and this applies to teaching children in general, not just about the money). *Each child will learn at their own pace, in their own way. Be patient. *Don’t do things for your children that they are capable of doing for themselves. *An occasional spoil or splurge makes them feel valued and gives them the ability to appreciate things…splurging and spoiling everyday will give them an entitlement… Read more »

Cherie
Cherie
7 years ago

As a frugal person with three kids I will share something – My kids are not 10,13 and 15. I’ve been sharing our budget with them since they were old enough to understand what money is. I didn’t talk about the numbers particularly, though they were free to examine them as they got older. But I did talk about what we planned for, what we budgeted for, how sometimes our plans went awry because of something unexpected and how we were grateful that we had the money to handle unexpected things, though it sometimes meant we had to change other… Read more »

krantcents
krantcents
7 years ago

I have 2 successful adult children. I asked my children a number of years ago what helped them be successful? I thought it was the expensive private schooling, after school programs or various enriching trips, it was none of them. It was my wife and I acting responsibly and modeling the behavior that made the difference. I think including them in everything we did which included work, businesses and investing didn’t hurt either.

Phoebe@allyouneedisenough
7 years ago

I’ve thought a lot about this. We don’t have kids yet, but plan on trying soon and I want to teach them certain things about money, especially since my husband and I have dug out of $65K of debt, but our kids will never feel that strain first hand since we’ve turned our lives around. I’m not sure how exactly we plan on doing this, but I think we will give them an allowance that requires them to spend, save, invest, and give at a certain rate. Just simply having a limited amount of money available makes it obvious that… Read more »

Holly
Holly
7 years ago

I am going to be a crank here…. when did GRS become a blog where the writer writes an article asking the readers for advice? This is supposed to be the other way around.

Jeanne
Jeanne
7 years ago

Loved this article! I related to it completely. I adopted a 10-year-old girl form Mozambique last year (3.5 years after starting the process), so I’m about six months ahead of you. Finances are one of the big issues we have been dealing with (believe me, you’ll have lots of issues, but it’s still DEFINITELY worth it). I give her an allowance for doing chores and for good behavior (you may find that you will have quite a few behavioral issues, especially with older adopted kids). One thing I found was that she expected us to be RICH. Though, yes, I’m… Read more »

Daisy
Daisy
7 years ago

Very fine post! In fact the concept of piggy box started to teach the kids, the habit of saving from the early age. This article is very useful for all parents.

Mike@WeOnlyDoThisOnce
7 years ago

Seems like you have a great plan–I’ll definitely take a couple leaves from your book when the time comes. Seems like a good idea to deal in concrete ideas instead of abstract metaphors when teaching kids about money, too.

Mom of five
Mom of five
7 years ago

Adopting non-infants is difficult. I cannot imagine adopting more than one at a time. Don’t worry about financial education – you’ve got a lot of years to teach your kids the mechanics of it. Just keep your head above water. If you find you get a few months where you’re all swimming effortlessly, enjoy it. Don’t try to start teaching something new. Attachment and bonding can take years. I don’t know how deprived and/or neglected your kids have been. Two of ours are adopted from foster care and both were food hoarders. I let them do it. I also let… Read more »

partgypsy
partgypsy
7 years ago
Reply to  Mom of five

Yes adopting kids and trying to teach them money matters at the same time even if well intentioned, can be problematic. Like my husband says when adopting a pet, the first rule is “kill them with love.” Make sure they understand your love is unconditional and you will not abandon them. When they are more integrated as a family, simply discuss money matters practically, as a team, and that you are all in this together and money is a limited resource, have to make decisions. If you start withholding money before they understand these basic principles, they may misunderstand your… Read more »

Derek Chamberlain
Derek Chamberlain
7 years ago

I think this is the single most responsible parents can do with their kids: teach them to be responsible with their money. My son is in Kindergarten, and I plan on implementing two ideas:

1) Give him a weekly allowance for doing chores and encourage him to save up his own money to buy toys.

2) Work with him to setup a kids type of business like a lemonade stand. This will teach him dozens of business concepts that he can take with him for the rest of his life.

Waverly
Waverly
7 years ago

I’m going to be a small voice of dissent here. My parents gave me and my siblings an allowance from the time we were tiny, but we had to do chores. As our chores increased, our allowance increased. I think I started out with one chore: feed the cat, and from that earned 25 cents per week or something. So far so good. The problem was that my parents forced me to give 10% of my allowance to our church. I was certainly too young to understand the concept of tithing. My parents explained it to me, but I still… Read more »

Bret Shroyer
Bret Shroyer
7 years ago

My wife and I are also adoptive parents – of a four year old girl from a Russian orphanage. That was ten years ago, and it’s easy to forget about the years of challenges we had – attachment disorder, food hoarding, and just plain oppositional behavior. Fortunately, we just stuck with it, providing unconditional love and support, and we had the help of her two (new) brothers to establish a “normal” family routine. When the kids were 4,5, and 6 we started them on a regular weekly allowance, giving them the freedom to choose where they wanted to spend their… Read more »

Savvy Financial Latina
Savvy Financial Latina
7 years ago

Remember to give them love, teach them to be cost conscious, and to treat the world and people right. If you teach these fundamental basics, they won’t get caught up in the consumerist rat race.

Jan
Jan
7 years ago

As a teacher, I cannot imagine giving a five year old an allowance of $30. And expect them to understand shoes. At nine being in charge of their activities? Really? Then again, I don’t think the aunt in the story was being a cheap skate for having several kids purchase the milk , that they drink, with one adult’s money. Pretty judgemental there. We did as my husband was taught, and gave the kids each a clothing allowance at the beginning of high school. They kept a ledger of input and output. Guess what? In their late twenties, both are… Read more »

Mike
Mike
7 years ago

Great article. My parents were extremely cheap and although they always had money, they (mainly my dad) tried to get away with stuff at the expense of others. Disconnecting the speedo on the car to keep car in warranty longer/ ordering water but filling up with soft drink / NO charitable giving. It took me a long time to learn about money and that its ok to spend/give money.

Sam@CreditCardShoppe
7 years ago

Great post. I was taught a little bit about money when I was growing up but definitely not enough. I was given an allowance but only if I completed my chores. I wasn’t really taught to save or give and I had absolutely no idea how much income my parents made. It was a big secret– and because it was never discussed, I ended up leaving college and getting into a heap of debt. I really could have learned a lot more had my parents tried to teach me about finances but it was just never something we spoke about.… Read more »

Camp Software
Camp Software
6 years ago

This is a keeper! Good info! Two things I like about the post, one it is straight forward and two it does not attempt to promote anyone’s position particularly. Nice work Lisa.

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