June is here and many families are busy prepping for their annual summer family vacation. While the main purpose of a family vacation may be to have fun, they also offer ample opportunities to teach your kids some valuable money lessons. We love to travel and utilize that passion to help teach Lauren and Taylor how to make smart choices with their money.
These money lessons are applicable to kids of all ages and I encourage you to invite your kids to participate in the family vacation planning from start to finish. Don’t worry if your vacation is imminent, the most important thing is to start talking to your kids now. You can start from the beginning on your next vacation.
Family vacations are practically a rite of passage from arguing with siblings in the backseat to car sickness to making treasured memories. They also don’t just happen. We have to plan and pay for them. Don’t keep that fact a secret from your kids.
I am a firm believer that every dollar should have a purpose, so that you utilize it on what matters most (and also save/invest your money properly too). Our girls know we set aside a portion of our family discretionary income for travel and plan our trips from there, including where we go and how many trips we take per year.
In my video, Teaching Kids Your Family Money Values, I shared why kids need to learn how you decide what to spend your money on, also known as your family money values. The girls know travel is something we value highly as a family. Vacations give us a chance to relax, to explore, to learn and to have fun. All things that matter to us.
Vacations are often our family save goal. We talk about our planned vacation frequently to keep it top-of-mind and the girls excited. I also use it to help guide money decisions when I or the girls get the “I wants”. We are always going to find things we want and goals help us make good decisions with our money.
This is a concept we drill into the girls because making value-based decisions is part of being Financially Real. We want the girls to understand that the choices we make with our money can either help us achieve what we want (like our family vacation) or take us further away from our ideal life, if we spend mindlessly. To demonstrate this, I’ll ask myself, “Does this bring me closer or further from my goal?” when I find things I like at the store and let the girls see me choose to honor our family save goal.
One easy way to get your kids to engage and learn how to make good decisions with their money is to get their input on how you utilize your vacation dollars. Kids love to be heard and make a difference, so let them have a voice on how you spend family money.
Most of us are fortunate enough to have some discretionary money left after we pay our bills and fund our goals. Some of us have big piles of discretionary income and others have small piles. But we all get to choose how we spend our discretionary money. Many spend mindlessly until their money is gone and not necessarily on things that truly bring happiness or fulfillment. I want my girls to use their discretionary income mindfully and on what brings the greatest joy to their lives.
To help drive home this concept, we give the girls a bunch of activities that we can do during our travels with some being more expensive and others inexpensive. They understand that once the money is gone, it’s gone. This is important, so don’t add extra money to budget. Make them decide based on the money available. The girls take this very seriously and spend time thinking about what activities appeal the most to them.
The girls have become quite thoughtful about how we spend our family money, which makes me so proud. Even better, they have also begun to weigh quantity versus quality. Neither is universally better than the other because the proper answer is dependent on what you value, which differs from person-to-person. They recognize there are certain things that are worth the day’s budget and other times they would rather spread the budget into multiple activities.
Thus far, we’ve been focused on spending the family money and showing our kids how we decide to use it. Now it’s time to give them some control and empower them to make good decisions with their own money too.
It’s absolutely okay to buy your kids a memento or two during your vacation, but don’t buy them everything. Instead encourage them to save some money to spend as they please during vacation. This should be money they either earn through chores or work or receive as gifts. You may want to suggest they set aside a portion of their save or spend goal money for vacations.
Kids have a tendency to spend money pretty quickly and will likely want to buy the first thing they see, especially if they are very young and/or new to making value-based decisions. Help kids see the big picture by outlining your various stops and what souvenirs they may want to purchase to help temper their spending and leave money for other things they find later.
This is also the time to set some rules on what they can and cannot buy too. While I like to give the girls a fair amount of latitude on how they use their personal money, I also don’t want to set them up for disappointment either by choosing something that I or their Dad will veto.
This is also so hard to do, but we do learn from our mistakes, so it is important that we allow kids to make mistakes and experience the satisfaction of learning and overcoming them too. Sometimes your kids will chose to spend their money on something you know they will regret later. It’s okay to remind them of their other goals and encourage them to make a value-based decision, but respect their decision too. Later, when they recognize their mistake, talk it over with them and gently help them understand their mistake.
Family vacations offer a great opportunity for you to create unforgettable memories with your family. And I also hope that amid your summer travels, you weave in a valuable money lesson or two. There are plenty of teachable moments, waiting for you take advantage of them. Hopefully, I’ve been able to give you some suggestions to help you do so.
What money lessons have you taught your kids during a family vacation?
Shannon
SHANNON RYAN, CFP®
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