Raising children who save

househuntingDecember 18, 2007

Mine have made me so proud.

My children learn about money and learn about saving. At 11 and 7 they know why we just don't buy and buy for the heck of it. They understand how loans and interest rates work (even though we have no debt). They go through the supermarket ads and make request for things that are on sale. In 20 years they won't be in debt they won't have screwed up priorities and I am so glad my husband and I are giving them this gift over the gazillion of things we can go out and buy.

In giving children EVERYTHING don't these people see how stressful their life will be when these kids become adults and have to make their own choices? I just don't get it. While our kids have more than most and we are extremely blessed they worked for their big wants like MP3 players and such. The other stuff is Christmas and b-day which we put a limit on.

What are some of the ways you are helping your kids make better financial choices as adults?

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Ah, the lessons that build character....

1. We eliminated envy from the house. When the neighbor kid rode down on his new super-duper birthday bicycle, the whole family celebrated his good fortune and told him what a great bike he had. None of the Smith/Jones complex at our home, so our kids didn't whine around because their bikes weren't "super-duper" like the neighbor kid's and we didn't have to quickly go out and get them bikes that were better than the neighbors. Without envy (a chief character flaw), you don't have the need to one-up the neighbors. So when you see that commercial (I think it's for Lowe's) where the guy gets a deck, and the neighbor gets a bigger one, same with the grill, etc.... (all on Lowe's CREDIT I assume), it's a great money saver when you don't have to contend with envy driving your purchases - kids AND adults.

2. The budget allowed a certain amount of money for things like tennis/sports shoes. When our son was young and wanted a much more expensive "fad" brand, I gave him the money that was in the budget for shoes and told him when he earned the difference I'd be happy to take him to get them. Same thing for jeans, etc. They understood what a budget was for, why we had established amounts for things, we weren't unreasonable - but would discuss ways to get the more expensive item (waiting another pay period until there was more money in the shoe budget, etc.) or options, like earning the extra, and they understood the sacrifice it took to get the more expensive item. More often than not, they quickly got over the need for the "fad" item, realized that extra expense didn't always mean a better item, but most of all, they learned how to delay spending and how to budget for items. I wonder how much money is wasted on IMPULSE purchases???

3. We gave our kids a roll of quarters each week to help them do a better job of using their free time. In order to watch 30-minutes of TV or play a game for 30-minutes, they had to pay us back a quarter. At the end of the week they got to keep the quarters they had left. They learned how much more valuable the money was than 30-minutes of cartoons or Super Mario (or whatever it was back then). It made them think what was important enough to actually spend money on, even in a small way. I think we did this for one summer.

4. As soon as our kids were about 9 or 10, they kept a bookkeeping system for income and spending. They knew how much they had for income, how to figure 10% for church, 10% for savings, and quickly could see how they were spending the rest of it. They could track how much it took to save up for something special, or save for Christmas gift-giving. They also had to work for their money - the old chores method - and earn it. Like Dave Ramsey says - an allowance is like welfare - get paid for just breathing. Not a good lesson in a work-for-pay world.


    Bookmark   December 18, 2007 at 6:04PM
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My daughters are 18 and 19, both have part-time jobs and attend post-high school classes. They get solicitations from credit card companies almost daily. I tear them up before they even have a chance to consider getting a credit card. I hate those darn companies-ensnaring kids with debt. My older daughter earns about $7000 a year and the younger makes about $100 a week. My nephew got a credit card in college. He used it to buy himself ski equipment and really nice Christmas gifts for his family. By the time he graduated from college, he had $10,000 in credit card debt.

    Bookmark   December 18, 2007 at 8:13PM
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On the card solicitations, I think it'd be a good time to show them how to opt-out of the mailing lists and which ones, along with do-not-call lists. That would be a good lesson to help them secure their identity and not get hung up on credit right away. I assume you're throwing away the offers with their consent and not intercepting them without their knowledge, which would be of questionable legality. :) To learn to protect their privacy and the like is a very valuable lesson, especially these days.

Show them how to use a shredder. A lesson your nephew would have been well-advised to have learned!

I remember back when I bought my first new vehicle. I was what, 19 or 20? Sheesh! I can't believe it, but I digress. I only financed something like $400 on it on a 9 month loan. Paid for the rest with savings. Probably could have paid it off if I liquidated everything but still wanted a little cushion in case of trouble. I was raised that way. To do over, I would have waited the few more months and paid cash but the gas difference was an offset too. Plus I took special pride that 1) it wasn't bought for me by my parents; and 2) I did it all myself. Yeah, same thing, but made me feel doubly good! :D Plus I drove that vehicle over 10 years and then gave it to my brother. I bought used for a while, bought another new vehicle in 1989 or 1990, don't remember exactly which. Paid cash for that one too. I drove that one into the ground essentially, and donated that a couple years ago to a local PBS station. Bought a van from a friend's estate and learned what a "money pit" is! Although it's still been worthwhile.

People do a total injustice to kids by not teaching the value of saving, and how to handle money, bank accounts and credit. Schools are guilty of malfeasance IMO for not teaching this.

I never got an allowance. I would occasionally get paid a dime for doing some of the things I was expected to do, such as mow the lawn, shovel snow, pick (by hand) every stinking dandelion in the yard, DAILY! My dad didn't believe in Weed-B-Gone! "Foolishness!" He'd say. Now I will add that occasionally if we asked to go to a movie or something, he'd give us the money for it. But otherwise, it was earn it. And it's stuck with me all these years.

    Bookmark   December 19, 2007 at 2:42AM
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My kids are 4, 5, and 7. Here are a few of the lessons we have taught them.

A few weeks before we went to Yellowstone this summer, I had the kids do work around the house with the promise of $3/day. They each earned $50 for souvenirs. The money was theirs to keep or spend as they wanted. They were all able to make it last the two weeks of the trip.

I use a debit card to make most of my purchases so my kids don't see where the money comes from. I've explained to them several times that dh goes to work each day and gets paid by his employer for doing a job. His employer sends the money to the bank which stores the money in our account. Then when we need money, I use the debit card to tell the bank how money we need to take out of our account to pay our bills or to withdraw cash. Apparently, the lessons are being learned. We were in a checkout lane near an ATM machine. My 4 and 5 yo's were watching people withdraw money. A man came up to me afterwards and told me he was impressed by my 5 yo ds because ds asked the man if he had an account and if he was getting that money out of his account.

My kids also love to clip coupons. My 5 yo is the most persistant. We went to the store one day to buy ice cream and the little critter pulled out a wad of coupons for the things he wanted including ice cream. I had another brand of ice cream picked out, but his brand was cheaper with the coupon. He was quite proud of himself. We're still working on the lesson that just because you have a coupon doesn't mean you need to buy something.

For birthdays, we'll pick a gift amount such as $20 and let the kids pick out anything they want in that price range. (We haven't taught taxes yet.) My kids are signed up for the Toys 'R Us birthday club. This usually means they get a $3 gift card in the mail and we'll also get a $5 off $20 coupon. My 7 yo has figured out that by using the $3 gift card and $5 off coupon, he can afford to buy a $28 gift.

We are also working on saving money. The kids don't have many money making opportunities at this age. I think we'll be able to get a handle on it. My two older kids are learning to count money and to value it. I've met some other kids their age who don't the difference between a nickel and a penny.

    Bookmark   December 19, 2007 at 11:14AM
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I'm 29, so I'm likely a lot younger than most on here, and I don't have kids yet. However, my parents gave me an (earned by doing chores) allowance, and we were required to put some in the bank. We never got toys unless it was our birthday, Christmas, or as a reward for good grades when we were little. Anything else we had to buy with our allowance.

My husband was raised in a similar fashion. The only debt we have is our house, which I think is pretty good considering the very high housing prices in our area.

I would like to comment to the poster who rips up credit card apps that come for her children. I got a credit card my freshman year in college, and have never carried a balance. I think it's actually good for young adults to have credit cards, as it allows them to start building a credit history and learn how to manage credit responsibly.

    Bookmark   December 19, 2007 at 3:12PM
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When I was a teenager, I really wanted a pair of those gorgeous Jordache Jeans. They advertised on TV all the time. The problem was they cost $50. My parents used to buy us Levis blue jeans for about $7. So I got a job in a grocery store that paid about $5 an hour, and it was more like $4 after taxes and union dues and my uniform fee were taken out. The job was awful. I had to carry boxes of fruit and put the price sticker on each bunch. It was hard, sweaty work and I hated that job. I realized I had to work more than 12 hours to buy one a pair of Jordache Jeans. Did I buy them? Yes! But I learned a good lesson.

    Bookmark   December 20, 2007 at 8:43PM
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I give my kids the sale ads from the grocery store and tell them they get $15 to feed all 4 of us 3 meals for the day. They spend hours pouring over the ad with pen and paper in hand. Then WE go get it. They love this activity.

They would have us eating Mac and cheese for breakfast lunch and dinner if I don't specify balanced meals. It also has to be something we all want to eat. My youngest is alergic to nuts and I don't like too many fried foods. I figure this is realistic since when I go shopping for meals I have to think about what every one enjoys eating.

Now when we eat they know it isn't just something that the food fairy brings. They understand that there is a lot of thought and preperation that goes into deciding, buying, storing , and preparing the food. They don't just say 'thanks for dinner' thay say "thanks for buying and making a good dinner."

    Bookmark   December 21, 2007 at 10:13AM
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