Children and Money

Kids Should Be Kids AND Learn about Money

Kids Should Be Kids AND Learn about Money | www.TheHeavyPurse.comWhen I talk to parents about teaching their children how to handle money, I get a variety of responses from nodding heads to flashes of panic and fear to outright disapproval. Often times when parents start getting resistant, I know what their argument will be: Kids should be kids and we don’t need to talk to them about money. Sorry to burst your bubble, but that’s a myth. This belief is why money remains taboo in so many homes and puts children at a disadvantage when the financial support from Mom and Dad ends.

Kids Already Recognize the Power of Money

I agree that kids should be kids and enjoy their time as one. We know how fleeting that period really is. 🙂 However, your children need and want to learn about money from you. Why? Because kids realize at a very young age the power money has. They understand quickly that things they want—toys, clothes, gadgets—require money. They see whomever has money (i.e. Mom and Dad) has the power to say “yes”. What they don’t understand is how to balance and prioritize their wants, when “no” means “yes” to a more important goal or how to use their money in a way that honors their values.

Left to their own devices, many kids would just spend. Few would worry about tomorrow because children naturally focus on today. Sadly this becomes reality for too many kids who leave home ready to spend but unprepared to make good money choices. Now armed with a credit card and too many memories of hearing “no”, they say “yes” and slide that card again and again without understanding the consequences of living beyond their means. And let’s get real—few kids even understand what their “means” are.

Money Conversations Should Educate, Not Create Fear

Parents who don’t want to talk to their kids about money often feel this way because they consider money to be a grown-up worry and don’t want their kids to get stressed out over it. I understand. I don’t want my girls to stress over money either, but that can happen whether we actively talk to them about money or not, which is why I choose to talk to them. Now they know money is not taboo in our home, so if they do get scared or stressed, they are comfortable coming to me with their questions or concerns.

When we were saving for our Disney Cruise, we talked to the girls regularly about how we were diligently saving for the big trip, so we couldn’t always say “yes” to things they wanted because our vacation was a top priority. And it worked, almost too well. Lauren lost her retainer and was devastated because she thought the cost of replacing it might mean we wouldn’t be able to save enough money for our vacation. Obviously, I did too good of a job. 🙂 So Lauren was introduced to a new financial concept called the family emergency fund.

I’m glad I discovered Lauren’s growing concerns and was able to nip it in the bud quickly, but I also don’t regret teaching her about goal-setting and prioritizing goals over lesser wants. Kids are always observing how we and others use money, and I would rather have us learn and make mistakes together. This way when things go off track, as they often do and did with Lauren, I can right the train before any long-lasting negative money beliefs are formed.

Money Conversations Should Be Fun and Unobtrusive

I also don’t believe that learning about money needs to be boring or a formal lecture. They are simply conversations around every day activities on how you use your money and why. These talks should be fun and not even appear to be a lesson. It’s just like sneaking veggies into their favorite foods. Here are a few ways to make learning about money fun for your kids.

Hold a Garage Sale and Let Kids Sell Their Stuff

A garage sale is a great way for kids to get rid of unwanted items (and clutter) and earn some money while doing so. Help them go through their clothes and toys and pick out what they want to sell and figure out reasonable prices. They keep any earnings and allocate them to their save, spend and share goals. Donate any remaining items.

Encourage Their Entrepreneurial Spirit and Start a Business

I am a big believer in kids earning money over parents just handing money upon request. Depending on your child’s age and interests, identify ways they could earn money beyond doing extra chores at home. Some ideas include babysitting, mowing lawns, raking leaves or shoveling snow, pet sitting or dog walking or coaching or tutoring other kids in a activity or subject they excel at. Help them figure out appropriate rates and how to market their business.

Put Them in Charge of the Family Entertainment Budget

Set a monthly entertainment budget and let your kids manage it, if they are old enough to do so. Otherwise, give your children options—both cheap and expensive choices—and let them decide. Help them understand that they can either do many things or one or two more expensive choices. Make sure they understand when the money is depleted for the month, there will be no additional funds added. We do this with the girls and I am surprised by how frequently they choose the less expensive options and don’t beg to do additional things once they money is spent.

Turn Saving into a Game

Most kids by nature are not automatic savers. By turning saving into a game, it makes it fun for them and helps them see the power of saving at a early age. Grocery shopping is a great way to demonstrate this to your kids. Have them work with you to create a weekly or monthly meal plan based on the store’s sales flyer and look for additional coupons to increase savings. At the store, talk to them about why you are willing to pay more for some items, than others. Calculate how much you save each week and then at the end of the month, do something special with the saved money.

It’s Our Responsibility to Teach our Kids to Manage Money Wisely

We teach our kids reading, writing and arthimetic because those are skills every person needs. And every adult handles money and makes choices every day on how to use their money. This is why helping our kids learn how to manage their money wisely is just as important as teaching them their ABC’s. I don’t want my girls to learn by trial and error. I want them to leave home financially confident and prepared to make smart decisions that align with their goals and values. This is why I teach them about money AND let them be kids.

Shannon

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Comments

  1. Monday, June 2nd, 2014
    I absolutely will encourage my children to be entrepreneurial. I was not encouraged to be entrepreneurial by my parents, and if anything I was DISCOURAGED. I really hope to instill in my children the fact that they can be either a small business owner or an employee. There is no right answer, and each has their benefits. I think that's a much better approach than to push them in one direction or the other.
    • Shannon Ryan
      Monday, June 2nd, 2014
      I have no doubt that you will definitely encourage an entrepreneurial spirit in your future kids as I know entrepreneurial you are! Like you said, there is no universal right option, but if kids understand they have a choice, then they can see which one fits them the best.
  2. Monday, June 2nd, 2014
    It is amazing how many people think that if you talk to your kids about money, then you are forcing them to be grown ups too fast. I have an 8 year old, who is absolutely a kid, loves to play soccer, read Captain Underpants books and tell fart jokes all the time, and yet he also likes to talk about money and how responsibility with it will pay off for him over time. He really enjoyed selling some of his stuff on eBay when we did that a few months ago. He understands that he needs to pay for non-essential items and it gives him spending discipline. There are so many ways to include your kids with money that don't age them, you just have to start doing it.
    • Shannon Ryan
      Monday, June 2nd, 2014
      I agree, Shannon. Learning about money does not make your kids age. In fact, when done right, I think they really enjoy it. My girls are still "kids" and money smart. My girls really enjoy taking ownership of their money and it has really helped them learn how to good decisions with how they use it. It's a bit amazing how once they have that power, they become much more thoughtful of how they spend their hard-earned money.
  3. Monday, June 2nd, 2014
    You make a good point in how we teach our kids basic math, science, reading, etc, so why isn't financial education part of that equation? I think it should be! It doesn't have to be pounded over their head...but needs to be there.
    • Shannon Ryan
      Monday, June 2nd, 2014
      It's a little bit mind-boggling to me too. Every single person handles money and yet so few parents and schools talk about money. It's something that definitely needs to change.
  4. Monday, June 2nd, 2014
    I could not agree more Shannon! I know we've seen as early as three that kids start to see the power that money has and it behooves us as parents to guide them through that and bring it down to their level while also not instilling fear. I think many parents make it out to be something it doesn't have to be and overcomplicate it for themselves. The fact is you can pull out money conversations in every day life, you just need to look for it and take advantage of them.
    • Shannon Ryan
      Monday, June 2nd, 2014
      I see it around age 3 too, John. Parents don't realize that kids start observing how we use money so early. Most wait to talk to their kids until they are leaving for college, which is too late. I agree that parents overcomplicate it because they think it needs to be hard. It doesn't. It's just talking through how you use your money and why.
  5. Monday, June 2nd, 2014
    These are some great ideas! I wish I had been more exposed to money lessons like this as a child. Thanks for sharing!
    • Shannon Ryan
      Monday, June 2nd, 2014
      Thanks! You are certainly not alone. These kinds of conversations really make a difference and I hope more and more parents start having them. :)
  6. Monday, June 2nd, 2014
    I always enjoyed it when my parents let me sell my stuff at our yearly garage sales. Even though they bought me the stuff in the first place, it was considered mine and they let me keep the money from the sale of my possessions. I like the idea of giving kids control of the entertainment budget (with limits and supervision of course). Perhaps they would come up with an idea that we haven't thought of.
    • Shannon Ryan
      Monday, June 2nd, 2014
      Garage sales are a great way for kids to earn some money that doesn't come from Mom and Dad. :) One of the best lessons from having your kids own the entertainment budget is it forces them to figure out what they really want to do within the constraints of a budget. Kids would love to do everything but once they understand that their budget doesn't allow it, then they learn how to prioritize and make compromises. Good skills for them to learn now!
  7. Monday, June 2nd, 2014
    Absolutely agree that money conversations should be to educate and not to create fear. I think many parents' default money lecture is to create fear so that their child won't pester them to buy whatever toy it is they want to buy. But it is much more helpful when you include the child in your money discussions and explain the reasons you are saving. So funny that your daughter thought her having to get a retainer would jeopardize the Disney trip!
    • Shannon Ryan
      Monday, June 2nd, 2014
      Very true, Andrew. Most parents default to fear without really realizing it or the affect it can have. Kids like having a voice and being included in money decisions make it much easier for them to play by the rules. They understand the family money has a purpose and see you making decisions to honor those goals, making it easier for them to do the same. Poor Lauren. She was so worried. :)
  8. Monday, June 2nd, 2014
    Great post, Shannon! I am going to save this one! I hear that all the time, too; that kids should be kids. But that's truly disguising the issue. It's totally possible for kids to learn about money in a kid way so they're ready for adulthood.
    • Shannon Ryan
      Monday, June 2nd, 2014
      Absolutely, Natalie. It is definitely not an either/or situation. Kids can learn about money in a fun way that doesn't rob them of their childhood innocence. And by not teaching them about money, they get a pretty big slap in the face once they leave the comfort of home and Mom and Dad's financial support.
  9. Monday, June 2nd, 2014
    Shannon, I don't have kids yet, but I'm planning to create a family soon. I've been reading a lot of your teaching kids about money posts, and they're great! Thanks for all the awesome tips, I'm sure I'll be using them soon!
    • Shannon Ryan
      Monday, June 2nd, 2014
      Thanks, Joshua! I appreciate your kind words. And I have no doubt that you'll be a great financial role model to your future kids. :)
  10. Monday, June 2nd, 2014
    I completely agree that it just needs to be part of normal life and you should use opportunities when they arise. Sometimes it does backfire. My Mom never talked to us about money and thinks kids should not worry about that stuff. Last week she took my daughter to the Disney store and pretty much told her she would buy her anything she wanted. My daughter then proceeds to compare all the prices and wants to go look in the clearance section! She eventually picked out a doll from the sale bin, and I think my Mom was a little put out, but I was secretly jumping for joy. I never really sat her down and told my daughter how to comparison shop. It's just what we always do, so it does catch on if you make it your lifestyle.
    • Shannon Ryan
      Monday, June 2nd, 2014
      LOL! I would have been doing my happy dance too. I understand Grandma wanting to treat her granddaughter, but I'm so glad that your daughter is a comparison shopper! Just because something is on sale doesn't make it any less desirable. Your daughter is picking up some good habits, Kim. Go Mom!
  11. Monday, June 2nd, 2014
    Gotta admit, I loved Lauren's reaction to worrying about replacing the retainer - I'd rather have that with hopeful little ones one day then have them assume it'll just come out of the "magical money pot." I like your points about letting them work on a budget - I worked when I was young so I've never had a problem with working hard, though allocating it was a different story since I would just spend, spend, spend. I definitely think it's a good idea to be more hands-on early on!
    • Shannon Ryan
      Monday, June 2nd, 2014
      I admit that I was a bit torn by Lauren's response. On one hand, I was grateful that she recognized her mistake, as unintentional as it was, still had consequences. But I certainly didn't want to put the weight of us going on our cruise on her little shoulders either. Thankfully we were able to get back on the same page and now she also has an appreciation for emergency funds! :) The earlier you can get kids working (and loving) budgets - the better. It really helps counter that spend, spend, spend mode. I'm sure when you an B have children you'll both be great financial role models to them.
  12. Monday, June 2nd, 2014
    I think I will struggle with this as a parent someday. I can imagine that as a parent you probably want to protect your kids from the worries of the world and have a carefree childhood. At the same time they need to be prepared to deal with money and have a healthy understanding and relationship with it in their adult lives. I can only imagine how challenging that can be.
    • Shannon Ryan
      Monday, June 2nd, 2014
      It is a delicate balance, Liz. You don't want your kids stressing over money, but you also want to prepare them to be able to make good decisions when they are on their own. I find the girls are far more comfortable coming to me with any questions or concerns they might have because we so regularly talk about money. And I also pick up much sooner if they have some unspoken fears too. Being able to talk over their fears is the best way to eliminate them. I know you'll do great when the time comes for you to teach your kids about money. You'll find a way to balance it and help them develop a healthy money attitude.
  13. Monday, June 2nd, 2014
    Seriously Shannon, you should be teaching this stuff in schools! You have an amazing way of putting complex issues such as kids and money, and making it so easy to relate to and comprehend. You are all kinds of awesome Shannon! :)
    • Shannon Ryan
      Monday, June 2nd, 2014
      Awwwww… Mackenzie. You made my day with your kind words. I love this stuff, seriously. Helping parents teach their kids about money makes me so happy and I'm so glad it's helping you too!
  14. Monday, June 2nd, 2014
    I agree with most everything you wrote. Taking the taboo out of money talk takes the fear out of money and creates valuable lessons for later in life. I just wonder what your thoughts are on dealing with the kids in times of financial stress. Say the loss of a job or a sudden decrease in income. I don't have answers here, just questions. I wouldn't know how or how much to tell the kids.
    • Shannon Ryan
      Monday, June 2nd, 2014
      Great question, Brad! I know parents have a tendency to want to hide those concerns from their kids, which I understand, but it's better to honest with them and explain the situation in an age-appropriate manner. They most likely know something is going on and if you don't talk to them, then they only have their imagination. When we experienced a job loss, we were upfront with the girls. The most important thing is that you and your spouse talk beforehand on what you want to share and any changes that need to be made, especially those that affect them. Be confident and let your kids see you have a plan in place and what they can do to support you. Some fear may still exist, so it's important to keep them informed and talk regularly with them so those fears are minimized.
  15. Tuesday, June 3rd, 2014
    I think there is nothing wrong with showing kids what it means to earn a dollar. That is a lesson that is not taught often enough today. If I had kids, I would like to think that I would teach them lessons in how to handle money even if it means taking them on grocery trips to the store and showing them to buy basic things.
    • Shannon Ryan
      Wednesday, June 4th, 2014
      I agree - not enough parents are teaching their kids how to use their money. It doesn't need to be punishment! :) And it's truly easy to incorporate in every day conversations.
  16. Tuesday, June 3rd, 2014
    Most of the lessons we teach our kids about money are using real-life situations. I think that's the best way to teach them- by providing a positive example!
    • Shannon Ryan
      Wednesday, June 4th, 2014
      I agree, Holly. We do the same and it makes it really easy to weave in those important lessons without seeming like "lectures" which kids don't like. And yes, being a positive financial role model is one of the best things you can do for your child.
  17. Tuesday, June 3rd, 2014
    Love the lesson Lauren learned about the retainer and how you were able to take that potential money "disaster" and turn it into an opportunity to introduce the concept of the emergency fund. This is how teaching kids about money should be! Life will always through us financial garbage, and it's better that we teach our kids how to handle those situations both offensively and defensively than to instead tell them to worry about that "later" because "later" usually never comes until those kids are adults and scrambling to learn how to deal with money on a large level.
    • Shannon Ryan
      Wednesday, June 4th, 2014
      I agree, Laurie. Life and money is not always neat and clean (no matter how much we wish it was) and we need to help prepare our kids to be nimble, so they can thrive no matter what life throws at them. It is so easy to fall into that trap of "later" thinking. Unfortunately, too often "later" comes much faster than we realize and now it's too late.
  18. Tuesday, June 3rd, 2014
    I really hate it when people consider kids shouldn't be bothered with this and yet many of us had financial issues in the past BECAUSE our parents 'protected' us. I don't plan on getting our daughter too concerned with money, it's our job at the end of the day to provide for her, but she should learn few things that will make a tremendous difference once she grows up.
    • Shannon Ryan
      Wednesday, June 4th, 2014
      Exactly, Dojo! We delay today because we think are protecting our kids, but it can actually be more harmful when kids leave home and get themselves into trouble because they don't know how to handle money. I definitely consider teaching my girls about money to be one of my responsibilities as a parent and I'm glad you do too.
  19. MomofTwoPreciousGirls
    Tuesday, June 3rd, 2014
    My girls are 6 & 5, and their automatic reflex when they get even a penny is to put it in their piggy bank! That's just always been the thing. Twice a year we empty the banks and put the money in their savings. Recently though they were playing a game on the iPad and they wanted to unlock some characters for $5. We had a lengthy chat about how we want to spend on the things that are really important. Like using that $5 to go have icys in the town center. They understood and went about their business. About an hour later the oldest emerges from her room with money in her hands. She said "mommy, I think this money is five dollars. Can I use it to pay for the game? It's 'portant to me" I asked if she was sure and she was, so I took it and paid for the upgrade. Now, I secretly put the money back in her pig later and paid out of my own blow money. It was so cute and it let me know they get it!
    • Shannon Ryan
      Thursday, June 5th, 2014
      Love this! It's fantastic that your girls has such a saving mindset and I love how you talked through whether or not buying the additional characters for their game was right for them. Better yet, they thought about it and eventually decided it was worth it. THis is exactly what we want kids to do, slow down and figure out how to mindfully use their money in a way that makes them happy. Your girls are well on their way to be financially confident kids!
  20. Wednesday, June 4th, 2014
    Nailed it! I love this post, per usual!

    Teaching kids about money at a young age can help foster healthy and happy attitudes towards work and wealth which pay so many dividends down the road! I didn't remotely feel like I grew up and stopped being a kid when my Dad started instructing me about basic finances at seven.
    • Shannon Ryan
      Thursday, June 5th, 2014
      Thanks, Erin! I agree - if kids learn about money and form a healthy relationship with money - it helps them out tremendously as adults by avoiding some of the common pitfalls so many other young adults fall into. You are definitely the proof of what can happen when parents talk to their kids about money!
  21. Wednesday, June 4th, 2014
    I feel like not talking to kids about money is like not talking to them about sex. They already know something about it, so better to educate them on what's right and true rather than facing the consequences of poor decision making and misinformation.
    • Shannon Ryan
      Thursday, June 5th, 2014
      Amen, Stefanie. It's interesting because I've actually had parents admit that money talks terrify them more than the sex talks. Both are important and worth any discomfort to help educate our kids and prevent poor decisions.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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