Teaching your children about money can be overwhelming and even a little daunting, but it doesn’t have to be. Learning about money starts by having conversations about it, and practicing money management.
Think about it. Do you get better at something the less you try? I do not. My skills often follow my investment.
In my previous career, I had the opportunity to work with students at a University. I witnessed worry, stress, and frustration roll in the form of tears down students faces because of inexperience dealing with money. It was hard, and heartbreaking.
With that experience fresh on my mind, my husband and I had a lengthy discussion about what we needed to teach our kids about money. At the conclusion of this conversation we decided, in our house:
- Our children will be aware of money.
- We will talk positively about money and use choice analogy.
- We will allow them money to manage/save/spend.
It was with that simple framework that we began talking to our children about money.
Our conversations started simply with why we work, and that working provides us with food, shelter, transportation, and entertainment. It developed into talks about the difference between needs and wants. Which led us to talks about choosing how and where we spend our money.
This is where the positive money talk came in. We wanted to make sure that we were not making our kids fearful of money, because they will undoubtedly have to work with it the rest of their lives. So, we focused on opportunity costs, or choices, instead of saying “can’t”. For example, instead of saying we can’t get that toy. We would say, “We choose to save our money for (fill in the blank).” Then the next step was letting them practice.
The opportunity arose for practice when our son, who was five at the time, declared he wanted a car. The type you sit in and drive with two seats. Realizing that is a big purchase, and would occupy a lot of garage space, we were very hesitant. However, noticing the passion he had about it, we decided to entertain it as a learning experience. We met him with a compromise. The deal was if he could earn half of the money to purchase it, we would match him dollar for dollar. In our minds, by the time he earned 1/2 of the money, his wants would change and it would be a moot point.
We started by determining how much he needed to earn. To do this, we looked up cars on the internet. We talked about how some were more expensive than others, which meant he would have to earn more.
Then the jar was introduced, which lovingly became known as the car jar where he could put all the money he earned for the car.
Next, we laid some ground rules.
We have two types of chores in our house:
Our Daily Chores: Which you do not get paid but you do because you are a member of our family which consist mostly of picking up after yourself.
Work for Hire Chores: Which are a little more extensive and allow you to earn cash, but you can not start them until you complete your daily chores. The amount of cash varies depending on the chore.
Prior to the introduction of the car jar, none of our kids were very interested in Work for Hire chores. However, this quickly changed. Our son, whom I had underestimated, convinced his sister and brother to help him earn money for the car. He had them sold on the idea they could all take turns. Within the first couple of hours, the kids had money in the jar. I will have to admit I was pretty amused at this point. They set a goal and were actually working towards it. Together. Pause for a moment of much needed silence.
Progress continued steadily, until I did feel a need to intervene as I heard the mention of pulling one of my daughters loose teeth to put the Tooth Fairy money in the jar. Other than that, we were happily supporting the completion of chores and the earning of money toward the car.
This week, they finally did it!!! They earned enough with our promised match to get the car. It was a long haul, and there were moments when I thought for sure they would lose interest. However, they dug in and talked about what they wanted most and stuck with the goal of the car. Now, we sit anxiously awaiting the arrival of our new family ride. Now the question is, What to save for next?
