We all have different relationships with money. Many of our associations are derived from whatever experience we had as children and how our parents related to money. All of this puts us on different paths in our financial journeys.
Regardless of where you’re at in your path, getting your children comfortable with money at a young age is a skill that will serve them the rest of their life. My audacious goal is to teach our next generation about the foundations of money so they continue to leverage the system in their favor throughout their lives.
Disclaimer: I know being parenting is like wrangling a hurricane and there are no hard and fast rules. Use the following as a foundation for structure. We all know that tornadoes can disorient even the most well-intentioned plan.
Set the Table
Depending on your child there can be different strategies, but they all start with finding ways for your kids to earn their dollars. Household chores, babysitting, special tasks. In my house, we’ve set up a system with daily chores to earn stars. The kids redeem the stars for a myriad of things including money.
I love putting them in charge as much as possible to enable them to make their own decisions. Instead of having everything on Mom or Dad’s tab, find ways to give them the money you’d be spending on them otherwise. The goal here is to engage their critical thinking, to take the step beyond “wanting” everything within a 10-mile radius of the mall.
Which Type of Child is Yours?
You might have a tornado, an overspender, or the lucky parent that has the child that’s more organized than they are; I swear I’m not judging. Either way, I’m going to walk you through some strategies that might benefit these types.
The Tornado
I love the concept of kids using cash so they can get a sense of the value of money. With Tornadoes, that might not work. No matter how many times you remind them, they have a hard time finding their shoes, let alone all their random dollar bills. Open a bank account. Having a bank account keeps them organized and diverts their attention towards critical thinking, not digging in the couch. Banks will let you open up a minor’s account underneath the umbrella of your own. If you’re hard-set on having them use cash, you can still use the same concept. Take the money out at the ATM on your shopping occasions or loan them your own and transfer appropriately.
The Overspender
Do you have the child that can’t hang onto their money for more than a week? “$15?! When can we go to the mall?!?” Talk to your child about what their ‘bigger’ goals are for things they’d like to buy. Pick up a few mason jars at the local thrift store and label them with the goal and the amount for them to stash their savings. This is a great visual exercise for making the earning and saving very tangible for their goals. Once they reach their goal(s), it’s Christmas!
The Child Who is More of an Adult Than You Are
Let’s skip the checkbook we were all given as kids. Establishing a credit history for your child as a teen will pay dividends (no pun) in the future. There are credit cards for minors to begin using credit responsibly; set the limit low and work your way up. I’m a huge proponent of credit cards because of all the great benefits they can provide. This is not an exercise in excessive spending. They shouldn’t be spending more than they currently have. Using a credit card is the tool to get them familiar with spending (and not overspending) while building a solid credit history.
Conclusion
As with any parenting adventure, there are going to be ebbs and flows to how this works in application. I urge you to be intentional with whatever approach you take. Encourage open conversations with your child on how they think about money and what works for them. Creating healthy money habits with your kids at a young age will give them the foundation to use the system to their advantage as they age in life.
