Raising Financially Wise Kids

It usually happens at the grocery store while I’m literally herding all four of my children and trying to make it out alive. A sweet grandmother-type will approach me, and with a reminiscing smile, she’ll say, “If you blink, they’ll be all grown up! Enjoy them while you can!”

In the years of endless diapers and toddler tantrums, I sometimes questioned that input. But I found out that there does come a day when you begin to see a light at the end of the tunnel of lost pacifiers and midnight feedings. You soon realize that things are changing and you are in a new stage: the big kid stage! This is when suddenly, they start asking questions you have no answers to, they make you laugh like no other, they want to engage in conversation, and they become more aware of the world and people around them.

I remember the sad day when my kids realized that buying toys off the store shelves was actually an option. For some reason, I got away with several years of looking at the toys–and, yes, I do confess to pushing all the “press me” buttons. But then, one day, they realized people actually buy these things and take them home. A light bulb went off in their brains! And that was the end of the age of consumerism innocence.

Raising Financially Wise Kids | Twin Cities Moms Blog

My kids went from being content with the things they had to a growing focus on what they didn’t have. I honestly wanted to avoid the issue and push them back into the innocent stage of wonder and amazement they had been in before. But it was unrealistic to never take them to the store. And lecturing about materialism wasn’t proving very effective, either. The reality is that stuff, money and spending are part of life. As kids grow older, they need to learn to handle these things.

Through a parenting class that my husband and I took, we realized that our home is the safest place for our kids to learn new things, make mistakes and learn from them. Sheltering them from making mistakes is not the goal. We want them to handle money for the first time as kids, not later when they’re 18. We want them to find out what happens with unwise spending while buying cheap dollar store toys; not later when it involves credit cards! In short, we learned that growing kids who will turn into wise adults starts now.

So with this new mindset, we implemented an allowance plan for our kids. We started responding to their pleas for toys with phrases like, “Oh, how fun! When you save up enough money, you could get that!” After a while, though, we realized that with the meager quarters they were getting for an allowance, it would potentially take them 5 years to get the things they wanted. Back in the Andy Griffith days, a nickel a week was a big deal. But not anymore.

So we decided to give the kids a raise. That was an exciting day in their life! Now they actually had dollar bills to put in their savings. The excitement was palpable. You could almost see dollar signs in their eyes, like cartoon characters.

But we had something else up our sleeve. Sure, they were getting a raise, but a raise comes with higher expectations. We showed them our new family team plan. We explained that as part of our family, we all have a role to play in the functioning of our home. On this list were things like making beds, keeping a tidy bedroom, and having a helpful attitude. We all agreed we wanted to live in a happy, peaceful home and it takes a team working together to make that happen. When a team member doesn’t do his or her part, a deduction is made to their allowance amount. On the flip side, if a team member meets all the expectations for the day and wants to make extra money, there is a list of additional jobs that they can ask about doing.

We now had a working system for them to learn to handle their own money and gain experience in failing and succeeding in a safe environment. But the thing about parenting is that much of it is a trial and error experiment. We have modified things many times to get to this point, and we will probably change them again. The dynamics of each child, each season and each age are so distinct that it requires flexibility and consistent modification. At first, I hated changing anything for fear that I wasn’t being consistent. But I have learned that I would rather be consistent in evaluating if something is working, and change things accordingly, than stick to something that isn’t effective.

In our current season, this allowance plan is working for our family. Your family might end up taking a very different approach to allowance, and that’s the point– to find what works best for you. But whatever it ends up looking like, these practical principles can help give you a framework for implementing an allowance plan in your home:

  • Get a worthy goal in mind. The point isn’t to just give kids money, but for them to learn how to manage it well. Finances are one of the top stressors of adult life. So why not teach our kids to have healthy money habits early on in life?
  • Be flexible. Give yourself permission to experiment and change things according to what fits your family best. Pinterest has thousands of ideas and charts to inspire you. Don’t feel intimidated. Pick something and give it a try. While doing it, you will find out what you need to modify.
  • Set a good example. Sometimes (or actually, always) parenting causes us to reevaluate our own habits. If there is something you need to change, be brave and do it! If we want kids to grow up to be healthy, well-rounded adults, they don’t need perfect parents. They need parents that model constant growth and the humility to change for the better.
  • Think out loud. Whether you are working on your budget, going to the bank or deciding if you should get that clearance item, your kids need to hear your thought process. Just because they are with you doesn’t mean they understand what you’re doing. Narrating your thoughts is one of the best parenting tips I’ve been given.
  • Let them fail. Oh, it is so hard! I cringe when my child is considering spending her hard earned dollars on a cheap toy that will probably break. It is tempting to step in and try to convince them otherwise. But most of the time they will learn valuable life lessons by experience rather than by being told. It is so hard to stand by and let them feel those hard feelings. Yet I would much rather they feel that now over a set of Legos than later when the stakes are higher.
  • Set boundaries. Just because Mom is going to get groceries doesn’t mean everyone should run for their wallets and beg to spend time in the toy aisle. I learned that my kids needed a clear boundary when I was being asked many times daily to go shopping! I decided I would take them shopping only once a month. This actually caused them to think about their purchases more carefully since the waiting time helped them sort out their priorities. Other boundaries I have found necessary in our family have been: being responsible with what they already have before purchasing more and choosing something of theirs to donate in order to make space for something new.
  • Be generous. Being financially smart doesn’t stop at getting things for ourselves. That is fun, but I also want my kids to be familiar with the fun that comes with giving. If we want our kids to grow into generous and thoughtful adults, we need to be adults that model that and give them opportunities to practice it themselves. Having their own savings is a great way for them to take part in getting birthday gifts for their siblings or friends. It is so fun to watch them grow in generosity and give gifts that they have a personal investment in!

Of all the things that could be said and all the many methods to pick from, my greatest advice would be to not fear the trial and error process. It’s better to try something and change it, than nothing at all. It’s never too early or too late! And if you have to make deductions to anyone’s allowance, please use that to get yourself a mocha as a reward for your diligent parenting efforts!

What other practical tips have helped you in teaching your kids to manage money? We would love to hear about it in the comments!

Joy Ballard
Joy was born and raised in Mexico by a Minnesotan mom and south Mexican dad. Ironically, she fell in love with a Minnesota guy and now they live in the Twin Cities with their two sons and two daughters. She spends most of her time homeschooling, trying to keep up with the laundry, convincing her kids to like her dinner attempts, and teaming up with her husband in running their vacation rental venture: The River Lodge. On a rainy day, she likes to create art for the lodge, their home, and others. Joy will always say yes to coffee, books and traveling--and all three combined are her very best life. She is awful at chit-chat, but loves getting into conversations about marriage, parenting, personality profiles, simple living and finding purpose and value in every day life. Follow along with her lodge and art ventures on Instagram @theriverlodgemn and @lemonjoystudio or connect with her personally @joy.ballard

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