It’s hard to believe that school is already back in session! Where did summer go? With my children bringing home backpacks filled with homework every night, it’s a reminder to me that I have homework of my own to instruct them on the important life lesson of managing their money.
Fortunately for them, their dad has some experience managing money. I try (and hope I’m successful) in teaching my children to have a written budget, follow it and to most importantly live within their means. I tell them if you have overdraft fees, you are not within your budget and are spending too much!
There are various ways to teach children about money, but I feel it’s important to start early so they have engrained habits as they enter the real world. I asked other Legacy team members how they teach their children about money, or how they were taught as a child about money. Read on to see what they have to say.
“Any financial gifts my daughter receives for special occasions, such as holiday or birthdays, automatically get put into her bank savings account. So any spending money she has on hand is earnings from chores or babysitting. When she is old enough to be able to have a job with wage/W-2 earnings she already knows she will put 50% in her savings account, with 50% for her discretionary spending. She understands that putting money away in her savings account now is for college related spending and other expenses that could arise in her future.” –Gretchen
“My dad started me with a savings account to get me used to having a bank account and taught me how to use it properly. It sounds simple, but I’m not sure that many parents are doing this today.” –Michael Lutz
“I’ve found that kids have to learn to spend money before they can learn to save. If you give a child $5 and he spends it on a cheap toy at the store that breaks very quickly, you now have an opportunity to say, ‘well next time why don’t you save the money until you have $10 and can spend it on a nicer toy instead of something quick at hand.’ Without learning how to spend money first, saving is too conceptual.” –Brenda
“My kids are 6 & 9. It’s interesting to see how kids view money as they age. One lesson I have learned is that they won’t value money until they are forced to use it for things they need/want. For example, my daughter has accumulated close to $100 in dollar bills over the years from various birthday gifts. From time to time my wife and I will remind her that if she doesn’t value or treat a toy, book, or someone else’s property with respect we will make her use her own savings to pay for it. We’re always taken aback at how unfazed she is by this. She’ll say something like “That’s fine, I have plenty of money.” It has occurred to us that until you’ve run out of money when you need it for regular expenses, it isn’t really painful to spend it. We’ve even considered charging her $1 per month in “rent” so she will a) feel the need to make money, realizing that if she doesn’t she’ll run out eventually and b) feel the need to save, and not waste money. In general, this also speaks to how differently people (not just kids) feel about money they’ve been given vs. money they’ve ‘earned’.” –Mike Wren
“When I was a teenager, I was fortunate to get an allowance. However, this allowance was in exchange for many chores, and was never given to me in cash, but in the form of a deposit into a checking account. This was before online banking or apps, so I had to learn how to balance a checkbook to make sure I never spent more than I actually had to spend. And most everything I wanted to buy had to come from that allowance, so if I spent it all on one silly item at the mall then that was it for the month- no more movies out with my friends unless I found a babysitting job, or was very convincing in why I needed an advance (which rarely happened). A good lesson to learn, and while annoyed at the time, I’m very grateful for the lesson.” –Marguerite