Wednesday, 10 October 2012

Teaching kids about money

It's hard, as parents, to figure out where to draw the line with our kids. We want to do everything for them, we want to give them everything under the sun, but we don't want them to grow up spoiled.

It seems like the best way to teach kids about the value of money is to give them their own. We started our boys on allowances when they were four or five years old, and they earn one dollar a week for however many years old they are - at five years old they earned five dollars, at six they earned six dollars, and so on. (This will get very expensive in a few years with three kids!)

We have a "Chore Chart" on the fridge where all of their daily chores are listed for the week. They earn a checkmark for each chore they complete. If they meet the minimum number of checkmarks by the end of the week, they earn their full allowance; if they missed a few, they earn less; if they're below a certain number, they earn none. It's all laid out where they can see it every day and know how they're doing that week, how many checks they have, how many checks they need, what chores they've forgotten, what extra chores they can do to make it up - the onus is on them to know what they're responsible for and what the rewards or consequences are.

And just as the allowance they can earn increases as they get older, so do their responsibilities. When they were younger, "chores" were things like getting themselves dressed in the morning & putting their clothes in the laundry basket, remembering to brush their teeth without being told, hanging up their coats when we came in, finishing their dinners. Now that they're older things like that are simply expected as a functioning member of the family. Chores now involve making their beds and cleaning their rooms, unpacking lunchbags and backpacks, setting the table and clearing their plates, finishing homework, and helping with yard work and house work. They understand what is expected of them and the dollar value attached to those tasks.

One dollar each week automatically goes into savings - each boy has a savings account they can watch grow each week but aren't allowed to touch until they're older. Hopefully this helps them to understand the concept of long-term savings. For short-term saving, the kids have learned that when they see something they want at the store, they have to save until they have enough money for it (or put it on a birthday or Christmas wish list). When they have enough, they can choose to buy it, or save for something bigger, or buy several smaller items - they're slowly learning the value of money now that they have to earn it for themselves and now that it is only available in a finite amount.

When they were younger I had a much harder time teaching the boys about the value of money. It was hard for me to say no to them - mostly out of guilt. I broke up with their biological father when Middle Child was only one year old, and raised them on my own for a couple years. This was by far the best, healthiest decision for all of us, and I don't believe they were affected negatively at all - my ex was such a limited part of their lives even when he lived with us, and they were so young when we split that they have no memory of his ever having been more than someone they visit once every week or two - but I still felt guilty. And, during those first few years when I had just reentered the workforce and was raising two babies on my own - with all the household and daycare and childrearing expenses on one limited income with no support from the ex - there just wasn't any extra money for treats, so any time I could afford not to say "no" when the kids wanted something, I said "yes". Again, out of guilt. The kids were starting to expect that if they wanted something, I'd automatically buy it for them - they were in serious danger of becoming spoiled, and had no concept that things actually cost money or that Mommy had to work to earn that money.

Instituting the idea of earning their own money to buy what they want has helped. It took a while to make them understand that treats are just that - treats - that they are not to expect toys and gifts every time we leave the house; rather, if there's something they'd like, they either need to put it on their wish list for the next gift-giving occasion or save up to buy it themselves. It took many months of saying "no" when I would rather say "yes" and explaining the lesson over and over again before their thinking and expectations changed and they began to understand, but now they do; if they see something they want when we're out they no longer even ask for it - instead the first thing they do is figure out the math on how many weeks of allowance it will take to save up for it.

We still spoil the boys in many respects. My husband says I go WAY overboard for Christmas and birthdays, which I probably do. The boys have grown so used to our constant field-tripping and vacationing that they now just take for granted that I'll have found some fair or festival or fun field trip or activity every single weekend, and it's always "next year at Disney I want to...". BUT, they also know to only have one really super expensive item on their wish list at a time, they ask rather than expect treats on our weekend outings, and they understand that Mommy being home with them every day and the family going to Disney every winter means having only one car and walking to the grocery store sometimes and helping with the shopping without complaint. They save for the things they want, and even spend their own money on birthday gifts for each other.

Christmas presents
Going overboard at Christmas
I'm proud of how smart my kids are learning to be with their money, as difficult a lesson as it was to teach, and I hope these concepts of earning, saving, and smart spending translate into their adult lives.

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