Children and Money

Raising Money Smart Kids in a Not-So-Frugal Family

Raising Money Smart Kids in a Not So Frugal Family | www.TheHeavyPurse.comEditor’s Note: I’m pleased to welcome Corinne Kerston to The Heavy Purse. Corinne blogs at One Income Life and is a freelance writer. If you’re interested in sharing your story, please review my guest posting policy and contact me. Take it away, Corinne …

Raised in a strict Asian household, I grew up in a family where money and gifts pretty much equated love. Sadly, I don’t remember a lot of hugging going on. Even today, my grandparents show their affection by handing out money whenever we need it.

That’s all fine and dandy, but I want more for my kids. Yes, apparently I want it ALL. But really … I don’t want them to grow up thinking money comes easy. Or that there will be gifts at every turn.

I want them to be smart about their money.

I’ll admit it; this isn’t always an easy feat. With family members being ever so happy to spoil them for every occasion (sometimes that occasion being because it’s a Wednesday), it’s difficult. Here are some tips to raise money-smart kids, even with not-so-frugal extended family.

Start Early.

The sooner your talk to your kids about money, how to use it and how to manage it, the better. If possible, start when they’re toddlers. While they won’t fully understand what saving and spending mean at that age, you can start them on the right path to saving their money and teaching them how to live on that money. For children that are already a bit older, an allowance can be a great teaching tool. Keep in mind that allowances only teach something if you have set rules, and when you stick to them.

Involve Them in Your Money Conversations.

Make managing your household funds a family affair. Let your kids help (or watch if they are still young) balance the checkbook, manage your online accounts or pay the bills. This allows them to get an idea of money in the “real-world.” You know, one where gifts and money don’t come at every turn. Show them that money gets spent on things and then it’s no longer available.

Teach Them to Appreciate the Simpler Things.

While you can’t always control what your extended family will gift your kids with, you can control how your children view things. You do want them to be appreciative of the things they get, but you also want to make sure that they appreciate the things that aren’t monetary or physical. Show them the value in spending time together, doing simple activities like taking a walk or playing a game.

Instill the Habit of Being Waste-Less.

Just because they receive clothes and toys, doesn’t mean they should be wasteful. Teach your children to get value out of what they receive. Is it something they really don’t want or need? Consider donating, selling or re-gifting the item instead of keeping it anyway.

Deprive Them at Other Times.

No, I don’t mean that in a mean way. If your kids are only spoiled during holiday times, you’re in luck. You can strategically deprive them throughout the year; they will be more appreciative of the things they do receive on special occasions. If your family is like mine where every day is an occasion for gifts, your battle will be a little more difficult. What we do is make sure that our kids are appreciative of things when they get them. We also try our best to make sure they never ask for things. It’s one thing to get gifts; it’s another to expect them all the time. Also, if you’re able to head off your family and act as the middle man, you can try hiding some things so your kids aren’t overloaded with stuff.

Talk to Your Kids.

If your kids are older, they are old enough to understand. Explain to them that just because family members want to spend money and dish out gifts at every turn, does not mean everyone else will, or that it is a wise money decision. Again, talk to them about being appreciative and not wasteful. Explain your financial values and set a good example for them to emulate.

Talk to Your Loved Ones.

If possible, have a heart to heart with your family members. Explain to them that you are trying to teach your children about the value of money and that you would appreciate it if they could cut back on the gift giving. In some families, you will be met with support and compliance. In others, not so much. If your family is in the latter category, you can try a different tactic. Offer suggestions of toys or gifts that will actually be used, and useful, in your household.

Teaching your children to be financially wise and a bit frugal can be hard when extended family isn’t quite in the same mindset. While it can be a challenge, it’s not impossible. Demonstrate your values as much as possible and lead by example. Your children will learn how to be financially-wise, even in a spendthrift world.

Corinne KerstonAbout the Author:
Corinne Kerston is a professional writer and blogger. She specializes in B2B and B2C content. Her goal is to help businesses boost their exposure through engaging, well-written content. Connect with her on her website or Twitter.

October 8, 2014  •  20 Comments  •  Children and Money

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  1. Wednesday, October 8th, 2014
    Those are good advice, which will surely help me! I have a problem with my 5-year old son who seems to have no idea about the importance of money. I just do not know "how", but my wife does---I just want to play my role. Thank you Shannon.
    • Wednesday, October 8th, 2014
      Hi Jayson,
      My 6-yr-old is probably similar to your son. She sometimes gets a bad case of the "gimmies." She wants everything, and it's hard when her great-grandparents will pretty much buy her anything she wants. We stay diligent, and try to show her that scenario isn't reality, that she just can't have a new $100 Lego set just because she wants it.
  2. Wednesday, October 8th, 2014
    We started including my son in our money conversations a few years ago when he was 6 and we have found great success with this approach. It not only helps him form his own views of money, but he sees how we make money decisions and how we make them as a team and I think that yields positive results on his behaviors.
    • Wednesday, October 8th, 2014
      Hi Shannon!
      This is a great approach! My daughter is 6 as well and at a great age to finally understand not only the literal value of currency, but how money decisions are made. Thanks for sharing!
  3. Wednesday, October 8th, 2014
    Aside form including my future kids in money conversations, I want to allow them to make their own money mistakes while they're under my roof so they can learn early and avoid those mistakes as adults.
    • Wednesday, October 8th, 2014
      Natalie,
      I think that's a great plan! Better to make those mistakes while they are under your roof than to push them out into the real world ill-equipped. Sounds like you have a great plan in place
  4. Wednesday, October 8th, 2014
    Kids understand a lot more than we think. My daughter can't really tell the difference between a $1 bill and a $100 dollar bill. They are both green and daddy likes them. She just realizes they are important and that we don't like to give them away to other people. She has her own little money that we give her so she knows that if we want to do something or buy something it requires us to use money and if it is gone, then so are the opportunities...so let's pick the best things to do. Little lessons add up over time...but if they are never taught, nothing will ever be learned and the home is the best place to learn.
    • Wednesday, October 8th, 2014
      Lance, I totally agree that the home is best place to learn these money lessons! Sounds like you are allowing your daughter to make her own decisions (to some extent of course) and giving her a leg up on managing her finances. We try to do this as well, the hard part in my family is the extended family. My kids are the first grandchildren and the first great-grandchildren, so naturally family wants to spoil them. I so see that the excessive toys sometimes sends conflicting signals from what we are trying to teach our kids, and there is where the problem is.
  5. Wednesday, October 8th, 2014
    Having also been raised in a strict Asian household...I know what you mean. Although I would have to say we didn't really receive many gifts. And generally gifts were "red envelopes" with money which ended up going into a savings account where my parents saved the money for us. I do think there needs to be more communication and having the children more involved in decisions to teach them to be money smart. I'm lucky I turned out okay by learning to live frugally by watching my parents. But I know many who grew up that way and decided to do the opposite because they didn't want to live that way anymore.
    • Wednesday, October 8th, 2014
      Andrew,
      No red envelopes (or lion dances) here, but my grandparents had money and they helped pay for private school, college and just about everything else. However, I don't remember them hugging me or saying I love you in my entire life. My parents weren't too frugal either, my mom passed away with a ton of debt. Not sure how I turned out to be frugal, but I'm grateful that I did. It makes life less stressful to not have a ton of debt.
      And I know what you mean about going the other way. My husband grew up opposite of me, so when he started working, he would buy whatever he wanted and not save. He did admit it was because he didn't have much when he was growing up he was over-compensating.
  6. Wednesday, October 8th, 2014
    My step-son has a fair understanding of money and how it relates to his world of needs and wants. We encourage his questions about it and we in turn try to share our ideas about what do when it comes to his money that he gets from gifts he receives.
  7. Wednesday, October 8th, 2014
    Children whose parents teach them money management have a huge advantage in life. Something I've found very effective for understanding the value of money is to have them calculate how many hours it takes to afford an item they want. This has quickly changed minds regarding paying 10-20x the money for brands over what a perfectly functional generic item would cost.
  8. Wednesday, October 8th, 2014
    "Instill the habit of being waste-less..."Boy if this isn't ever the challenge, especially at the dinner table. Always seems like we throw out more food than I would like. But I also see it in the things kids buy that have no lasting value to them. They play with the toy for a few weeks and then it gets shelved. That's something we are working on with ours is to make better decisions and think through how much you really want that item before you buy it.
    • Wednesday, October 8th, 2014
      Hi Brian,
      Oh boy do I know about the toys that have no lasting value! My daughter especially, wants everything. But nothing really holds her interest for too long and we end up with different toy sets that don't get played with. Drives me insane! Every now and then we purge her toys, sometimes she helps, sometimes I do it so she has no idea what I'm getting rid of.
  9. Wednesday, October 8th, 2014
    While I don't have kids of my own, looking back on my own childhood I was much more appreciative at Holidays because I was deprived throughout the year. I think that's a smart move parents can make.
  10. Wednesday, October 8th, 2014
    This is something I really struggle with. My parents sound a lot like your family. I guess that's one good thing about living far away from them. We tend to only get spoiled a couple of times a year. The other issue is that our other set of grandparents doesn't have much money, so I don't want our daughter to like the set who gives her the most gifts over the other ones. We are trying hard to teach that gifts are special regardless of how much they cost and to always be appreciative. You have some great tips that I'll have to incorporate.
  11. Saturday, October 11th, 2014
    I like the bit about "depriving" your kids so they don't get overloaded with gifts: how often do you see young kids get a ton of stuff at Christmas time but then quickly get bored of everything? My mum was crafty with presents I received as a youngster. She would allow me to open them all (so grandparents were all pleased to see wrapping paper flying everywhere) but then she would make me choose 2 or 3 that I wanted now, and put the others away for later... much later, when I had forgotten about them. Then, maybe once every couple of months, she would swap out an old toy (one that I wasn't interested in any longer) for a new one... it was always random and NEVER related to if I had been good or not. I loved it and I'll be doing it with my kids. It also helps to keep the clutter down in your kids room.
  12. Tuesday, October 14th, 2014
    My brother and I were spoiled by our grandparents because we were the only grandchildren. And my parents never talked about money and aside from the occasional chore here and there, we didn't have to work hard for anything...they even paid for my college and enabled my brother for years. I'm not blaming anyone, but in retrospect I wish things hadn't come so easy. I think there were money lessons to be learned there that were never taught. I mean I even got a brand new car at 16! I'd never buy my 16-year-old a new car (but I don't have kids so no worries there). But if I did there would be so many things I'd do differently.
  13. Wednesday, May 27th, 2015
    Very well written Corinne, I admire this post. Every point is well said and should be applicable to teach kids at the very first stage of kindergarten. We should involve our children in money affairs like saving, what to buy, how to spend, giving to poor or charity :)
  14. Tuesday, December 1st, 2015
    I do agree with Shannon that you have described about money in every point. It's always a basic fundamental for all kids in their childhood that they learn about a value money and in order to do that kids always have some teaching lessons on a specific topic that "Importance of money". I do believe that you have covered this lesson in this an incredible post.I would also like to mention that kids always have to learn something about their opposite situation like if they have foods then show them an example other kids, where they don't have foods because being experienced psychological doctor, this is an amazing and effective practical.
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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