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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There are 28 comments to "The first step to teaching our kids about money".
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.
I liked my plan, Ann, but we have a long way to go. It sounds like you have some experience with adoption so you know the challenges that we are facing now – which have very little to do with finances!
We still aren’t home yet, but we’re interested to see how the transition into the American culture goes.
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 three slots- share, save and spend. Her “share” she shared with her school for a fundraiser. She says her “save” is for a house someday!
We explain conservation and money management on a daily basis- from turning off the lights and taking reasonably timed showers to not buying treats each time we go to the store.
As for me, I grew up with a spendthrift dad and a cheap / frugal mom. Mom would buy poor quality products because they were “cheap” then they’d fall apart or wear out quickly. Neither of them ever earned much and we were a working poor home. I didn’t have much growing up. In this way, I’m used to doing without so I don’t have desire to have the latest/greatest/biggest of things.
Luckily, I found a husband who is frugal like me. I’m generous in giving to community needs like food banks and to my oldest’s school…
and we’re using our neighbor as an example of what not to do with money. Our neighbor hasn’t paid on her house in 4 years, it’s in foreclosure- the husband died and the mortgage was his, not hers. They both had credit card debt and other loans. Meanwhile we see her with fast food, and other ways to fritter money (like adopting another pet… I have two cats and I know how expensive a pet is).
Looking forward to the responses as my kids are not quite to the stage where they understand money, but they are getting close.
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! 🙂
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.
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 mentality. So it’s ok to give them what they want some of the time but not all of the time.
*Giving children responsibility (even with money) helps them to learn to be responsible.
Sounds like you are going to have some lucky kids…enjoy the parenting adventure.
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 plans.
They NEVER talked to anyone else about budget stuff LOL – they seemed to either think it was boring or know it wasn’t polite to discuss with other people.
On the flip side, they now understand that money is for making choices about, and that there are consequences to any choice, good and bad. And they ask all kinds of questions now, about choosing careers, spending vs savings, colleges and other life issues in relation to money.
So don’t fret about sharing private information – if they do tell anyone they probably won’t be listened to anyway LOL
ETA and congrats on your new additions!
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.
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 money doesn’t just appear out of thin air and if you want something it will preclude you from buying something else. My husband and I have “fun money” each month and it’s amazing how creative we’ve gotten with how we spend it because we simply know it is not unlimited.
I also think a lot about big gift giving events like Christmas. I know that extended family will be giving our kids quite a haul, and I don’t want them to forget that tons of kids out there have less. I think we will make serving those will less part of the holidays by volunteering through our church. To me, that’s what the holidays are about anyways.
Mostly, I want our kids to see, modeled in us, that being happy is about being surrounded by the people you love. I want them to see that with very little money spent we’ve been able to create a wonderful life, put money aside to have security, and to provide for their future. I haven’t worked out all the details yet, but when they are old enough this may involve sharing our budget and perhaps even saving totals, with them, and comparing them to U.S. averages.
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.
I dunno…If I knew everything about everything (which I don’t) I still would like others’ opinions/experiences. I prefer a conversation over just giving advice.
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 very rich compared to the family she came from, I’m middle class here in America. So, we can’t get everything she wants as soon as she wants it.
We do the three divisions of allowance, too – saving, spending, giving. When we visited my family in March, she gave that chunk of her allowance to my sister-in-law’s parents.
I recommend revising your budget now (if you haven’t yet), allowing for your new expenses. In our house, when she asks for something new, if it’s in reason, we look at the amount in the “saving for bigger expenses” column and figure out how many months it will take to save for it, given not using it for something else. Or, when there’s already something in the list, we figure out which is more important to get first.
Remember, it’s okay to spoil them some, though American levels of spoiling are hugely beyond what they would consider spoiling before they get here. If friends/ family want to help, you may ask some of them to wait. For example, my best friend didn’t give my daughter clothes right away – we had already received winter clothing. Rather, she took her shopping in the spring for the next season’s clothes. And that shopping trip was also a lesson – “you have $x to spend for summer clothes. When you’ve spent it, we’re done.” So, we looked in different stores – “you can buy two pairs of shorts here for what one pair costs there, and they appear to be of the same quality.”
Congratulations on your new family. I hope all goes smoothly, and that when it (inevitably) doesn’t, you have the humor and wisdom to roll with it.
Jeanne – thanks so much for sharing. I think the kids expect us to be wealthy, too, but I guess I won’t know for sure until we get back home. While we’re still in their country, things are so different. We’re with them 24/7 (not working) and whenever we need money, we go the ATM. They don’t see the years we saved to get here. Anyway, it will be interesting to see what happens.
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.
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.
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 them eat as much as they wanted, even if that meant they’d make themselves sick. I felt like they needed to understand that there was always going to be enough food in the house. We were very fortunate that our food issues didn’t last more than a couple of months, don’t know if it was our deliberate somewhat unorthodox approach or if the kids would’ve gotten over their issues anyway.
The reason I mention the food thing is that I suspect that money comes along those same lines of things you may have to be flexible on. The last thing you want is an older adopted child to feel deprived. The most important thing is your children’s emotional health. So if you have to compromise your own values to further the attachment and bonding, do it. And don’t feel guilty.
I remember very clearly once buying a Weeble Treehouse for my five year old son because he had gotten wind that I was heading out to Target. I could tell there was more going on than just the normal “I want the Weeble Treehouse” whining of a five year old. (If you don’t have those ‘this isn’t normal kid stuff’ radar yet, you soon will). I returned home with the Weeble Treehouse for my five year old and thank God I did. I believe in my heart of hearts that not having done so would’ve set us back emotionally. He slept with those Weebles, kept one in his pocket and another in his backpack, took baths with them, and generally looked at them as a symbol of mommy’s love for him until he was about 7 years old.
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 frugality as a limit on your love, that there may not be enough money and they may need to be sent back or some other misunderstanding.
It’s good to have a seasoned adoptive parent’s perspective. I’ve been trying to slow myself down…first things first. We have the attachment/bond thing to work on and the language barrier. Your post was a reminder that Rome wasn’t built in a day, so I need to chill.
And your comment about adopting more than one at a time made me laugh…we were almost referred a sibling group of three. As challenging as two have been, I can’t imagine three!
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.
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 thought it meant that god needed money to buy groceries.
After 18 years of forced tithing, (and being forced to attend church, etc) I am still really resentful of my parents for doing this. (I’m also atheist.)If you’re going to force your kids to give some of their money away, let them choose which group to give it to. Don’t assume that they want to give their money to the same causes that you want to give your money to.
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 “fun” money. This was a deliberate ploy on our part to see if they could handle delayed gratification. They put fifty sense into savings, fifty sense into the charity jar, and two dollars into their “fun money” wallet. They quickly learned that they could buy a pretty nice toy if they could hold out for a month or two – or they could buy little stuff every couple of weeks.
After a year, we moved to a monthly allowance, and included their shoes budget in that. Now they got $30 per month and saved for fun items and for their shoes, swim shoes, winter boots… We helped them to keep a checkbook register, and also made up a line chart for them so that they could see how their fun money was accumulating toward a goal.
There were fits and starts during this two year period. Sometimes money would “go missing” out of their shoes budget, or they’d spend their charity money on candy. When this happened, we’d take control back of their budget. It was a lot less fun for them when we handled their money, and they didn’t have that freedom. The big turning point was when we started giving out a $5.00 bonus each month if everything was in balance. It was a bonus for taking care of their money!
By age 9, each kid was managing their entire budget – all of their sports, activities, clothing, shoes, savings, gifts for others, and so on – about $150 per month. (Kids are expensive!) Surprisingly, each of them was able to move to full budgeting when the time came, and they’ve made very few mistakes since then. It’s nice to have kids come to us and say, “Can you help me figure out how this will fit into my budget?” – rather than, “Dad, can I have $20 so I can buy a new pair of sunglasses?”
Kids are adaptable and smart – start them early, and have frank conversations with them about money. Start giving them responsibility, I think you’ll be surprised at how much they’ll be able to handle on their own.
Good Luck!
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.
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 saving nicely for retirement and financially running families of their own.
IMHO- Financial education comes with open communication and time. Forcing kids into stress of worry about money at such an early age??? I wonder if it will create more hoarding and selfishness as adults?
Yup, I can be judgemental as well.
Why I feel the need to give more details on the silly milk story, I have no idea!
Maybe I was 7 or 8, but it was before I became judgmental ;). Back then, it just felt wrong, like I was cheating the store. They said two gallons and here I was, getting two extra! So
I wasn’t judging my relative, only feeling guilty that I was doing something I shouldn’t. Now, though, after having the opportunity to observe this relative’s behavior over many years(who also happens to be the person in the second story), I am judging her behavior as cheap. And I love her anyway. To continue my over-sharing streak, my relative’s life was crummy, forcing her to live a pinched existence and scrounge for every penny. I get that, but I hope that’s not in my children’s future.
A child’s financial education starts very, very early, whether we like it or not. Kids observe everything and can detect hypocrisy easily. So I would guess that your children, even if they didn’t start getting an allowance until high school, saw you and your husband modeling good financial behavior. Obviously, so many factors influence financial success. What we verbally teach them will probably have the least impact.
Still, my husband and I have made the calculated (and we believe, loving) decision to implement this plan. Of course, as I’ve mentioned in the post and other comments, we have other things to do first. I don’t know when we will officially start. It depends on how well they attach to us, blah blah blah. Our intent is to help them NOT worry about money; we don’t want them to hoard it, but we want them to be careful with it, too.
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.
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. I definitely give you kudos for your plan to teach your kids about money. It is something that will really help them in the future.
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.