What We Teach Our Kids About Money

We are in debt and we hate it. I’m not talking about our mortgage. I’m talking about consumer debt, credit card debt that we fell into because we were living beyond our means. Due to this, we are trying very hard to teach our children about money and good money habits.

When The Kids were very little, they had a weekly chore chart.  We paid them $1 a day if they did all the tasks we asked them to do.  Essentially, each task ended up being worth 12 and ½ cents. We paid them out weekly and then divided their money up into three categories: save, spend, and tithe. When they were very little, they put 50% into savings, 40% into spending, and 10% into tithing.  Savings was, and is, considered long term. Spending can be for whatever they want; they might be saving their spending money to buy an expensive something or they can spend it on books and candy if they want. Their tithing money is also spent how they want. They have donated the whole amount to church. They have gone shopping for groceries to donate for a canned food drive at school. It’s really up to them. We want their tithing to be meaningful so they get to decided how to spend it.

As The Kids have gotten older we have moved away from the chore chart and started paying them to work.  They earn $5 per hour that they work.  That’s not to say they don’t have chores they are expected to do as part of our family, because they do; but we pay them $5 an hour for extras, things like cleaning the bathroom, washing the cars, dusting, or generally anything we need at any given time. They also have gone to both sets of grand-parents’ houses and helped them. There they have weeded, wrapped Christmas presents, and un-packed boxes.

Once they get paid out the money they are owed, it is still divided into three categories: save, spend, and tithe, though our percentages have changed a little. Now they put 50% into savings, 40% into savings, and still 10% into tithing.  As they get older, we might revisit our breakdown again, but this works for us for now.

The Husband and I fell into poor financial habits, so we are doing our best to teach The Kids good habits.  First among them is savings.  In addition to long term savings, The Kids have to save for certain items they want to buy.  They are not allowed to buy on credit. They need to save for any large purchases they want to make, or have enough money for any smaller purchase.  This past summer, The Kids saved their spending money to buy themselves iPods. To encourage good saving and spending habits, we offered to buy them a case for their iPod once they reached their goal.

In our home, we often talk about money. We talk about how expensive something is or how we can’t afford something or why something is a good deal. We don’t want talk about money to be taboo.  We do, however, tell the kids to be discreet. We also explain that they shouldn’t flash money around or constantly tell people how much money they have. We talk about how much money The Husband and I make per year, how much money we bring home, as well as how much we have to pay for bills.  Our goal is to raise financially literate adults.

As The Kids have grown, we also talk about the use of credit, especially as we make most of our purchases using a credit card. They used to think that “things just cost a card”. We have worked very hard to dispel that theory and explain to them that we use the card, but that we have to pay money for everything we buy. Each purchase costs money and we have to pay for it even if we use “a card”. This is another way we are trying to teach them to be responsible users of credit.

We are also trying to teach them to save. We want them to save for both long term goals (car or college), and short term goals (iPod, video games, books).  We want them to save so they pay themselves first. We want them to save for their wants so they don’t go into debt for them. We want them to see saving for your wants as a way of life so they don’t always expect instant gratification. We want them to tithe, or give, so they see there is a world beyond themselves that they can help.  Our hope is that by learning good money habits early and young, they will become lifelong good money handlers.

If you stuck around this long, thanks.  I think kids and money is an important topic and it’s one I’m sure I will write more about in the future.