Teaching Kids to Be Money Smart, Including an Interview With My Son

I have had many posts over the years where I talked about teaching kids how to be financially savvy, but, like with all things, how I've done things has evolved, and in this case, quite tremendously.

I used to include my kids a lot in discussions about finances, thinking that it would help them understand money and be smart spenders. I was told by a family therapist, though, when I started seeing her as part of the divorce process, that people talking to their kids about their family's finances, period, even without exact details and even without sharing monetary stresses with them still is a stress. That thinking about their family's finances puts too big a worry on young heads and can be detrimental to them in both the short and long run. That talking to them about finding the best deal and how I'm saving money is not good for them. This was really frustrating for me to hear, because I thought that I was doing the right thing, teaching them important lessons already from a young age. I've seen what happens to people who grow up in homes where their families had no money sense and they repeat their families' issues and I wanted to make sure that would not happen to my children.

So how exactly am I supposed to teach my kids smart financial habits? With their own money, is what I was told. Teach kids how to budget their own money. Give them ways to earn it. Let them see that if they spend more money now they won't have it later. Let them learn to check prices to see what they can get for their budget. Show them that they can get more for their money when they look for good deals.

And so this has been what I've tried to do for the last three years. 

I don't know how well I've done, to be honest, because my younger two are still a work in progress in this manner. But I do sometimes send them to the corner store and give them a certain amount of cash and tell them that they can have as many treats as they can buy with that much money, and they do the math to see what they can get, and realize that they can get more treats when they choose the cheaper items. They do sometimes ask me to let them buy stuff that cost just a quarter or fifty cents, and want to do this a few times a week, but I am still trying to get them to internalize that these quarters and fifty cents add up quickly enough.

Another thing I do with my daughters is when I am shopping online with them, they see me price compare between different sites, and know that Amazon is more expensive than Aliexpress, that one comes from the US and the other from China (and that one takes longer to ship than the other). They do know, though, that if they want me to buy something, I am more likely to agree to buy it if it's from Aliexpress than Amazon because of the price difference. Within each site, they see that I have the sites list items within each category from cheapest to most expensive and that I am more likely to agree to buy them something if it's from the start of the list than further down.

Lastly (that I can think of off the top of my head) is that my kids know I keep track of my expenses. When I send them to the corner store to buy something for me, they know to bring back a receipt because I write it all down on my phone.

My boys, on the other hand, have internalized money smarts more. That probably also has to do with the fact that they're older and not just that I started this different way of talking about money with my kids at an age when they had already learned the previous way from me.

As I wrote in my previous post, I gave my oldest son, Lee, a clothing budget from which to buy his own clothes, which taught him how to choose what he'd rather spend it on (more of the cheaper items, or less of the more expensive), which I think helped. At 14 Lee has already has saved up a lot of money. He's worked for various jobs, including doing content writing (via his good friend's mom's company) to pet and plant sitting. Unfortunately, his money is just sitting there instead of growing. He really wants to open his own bank account, but in my country, as far as I know, kids can't open their own accounts. (As I was writing this, I just searched the internet and found that they can from the age of 14! So Lee finally can!) But I don't think he will be able to invest to watch his money grow. Unlike in my country, in Canada they take this more seriously already from a young age, where parents start investing for their children pretty much as soon as they are born. I still have to look into options locally to see if that is an option for my son.

But for now, Lee holds on to his money, buying things only sporadically, and that are meaningful to him. He purchased a few parts to upgrade his desktop (he wanted a better graphics card) and bought a better quality phone, but beyond that, he rarely spends his own money, because he likes having it available for things he really wants. 

Ike, at 12, has fewer options to earn money. He does have a regular job to wash his grandmother's car for payment. He also saves up and doesn't spend his money on frivolous things like his older brother. And is willing to stick to a budget that I give him.

As part of this post, I thought I'd interview each of my kids and have them share with you their thoughts on being money smart, but in the end only managed to do this with my eldest, Lee. So here we have it. (I wrote down his words exactly as he said them.)

Me: So, Lee, what do you remember being taught about being money smart?

Lee: When you're at the store and you have a choice between a more expensive and less expensive item, always pick the cheaper one if they are the same value. Save, don't spend. You showed me your app that you can budget with and you put in your income and you get to put in how much you spend on different things and how much you want to save and it shows you how much you have left to spend on different things. [At this point he heard that the app was not free.] Ugh, you pay for it? I don't like the app anymore. (By the way, he doesn't know how much my income is, just the general concept of how YNAB works, that I showed him with amounts blocked off.)

Me: What advice would you tell parents on how to teach their kids to be money smart?

Lee: I would tell people to make sure their kids are very money conscious and money aware and that it doesn't poof out of the air and that it's something that needs to be worked for. I'd tell them to give their kids opportunities to work for money so they realize it is hard to get, and maybe they'll think twice about spending their money like kids often do when they're with their friends. Teach them the value of saving money. At an older age, teach them what schools don't do, like how taxes work and how you should be saving money and those types of things. Except lots of adults don't know that themselves.

When I asked these questions to Ike, he told me "Write the same thing Lee said, you taught us both the same things."

But beyond anything, most important is to let the kids see you lead by example. See that you don't just buy whatever you want, whenever you want. Let them see you pick things out from the sales rack. My kids know that I buy things from the scratch and dent store, and my kids prefer to buy things from there too and have asked me to buy them treats there with their own money, because they know how far it stretches there. Let them see that you keep track of your spending. Talk to them about the concept of credit card debt and how when you borrow money you pay back more than you borrowed, and that the amount can just grow and grow.

Kids don't need to have lectures on finances, and they don't need to know whether you are struggling financially or not. Let them have the peace of mind to know that they are being taken care of, without details. (And if you aren't able to manage, please keep that away from your children if at all possible, because the trauma of knowing that you don't have enough growing up can really cause PTSD type symptoms.) But they learn from example, seeing how you live your life. And if you do money smart things, they will pick it up, even without lectures.

For now, I want to leave you with a conversation I had with my 10 year old, Anneliese, recently. The topic of Disney World came up, and that it was an expensive trip. She knew that I went to Disney when I was a kid, and she said "Mommy, were your parents rich?" I told her that my parents were not rich when I was growing up. That Grandma and Grampa went to college and borrowed money to pay for it, and had to pay a lot of money back for many years. I mentioned that my parents always tried to buy things cheaper, shopping groceries on sale, and that we got a lot of hand me downs bought almost all our clothes from the used clothing store, as well as did lots of yard sale shopping. I told her that even once they finished paying back for the school, they still lived the same way, not spending a lot of money on food or clothes or toys, but instead saving that money and using that for what was important to them, family trips. I told her that my family took quite a few trips abroad from the US to where I'm living now (where my grandmother lived) plus once to Disney. My parents knew what was important to them and made sure to have enough for that by spending less on things that mattered less to them. 

This type of "in action" lesson is much more helpful for children than lectures, and my money smarts now probably are in part due to lessons I internalized at home via my parents' money habits.