Teaching Sustainable Financial Management Skills To Kids

Why don’t we teach this stuff in school?

One of the things that I find most disheartening in our educational system is the lack of financial management skills training for our kids. Seriously – can you think of many other skills (besides say, cooking) that will be necessary for every single person regardless of their field of study or profession?

And the marketing. OMG the marketing. These kids are bombarded with it everywhere. Consume, consume, consume. Then die. Make it stop!

To me money management is not just balancing a check book. Is that, plus a way of living that allows for a balanced sustainability life.  As parents we really  we want to impress on our kids these values as they grow:

  • Experiences are most often more enriching than stuff- travel, plays, museums, movies, family time, etc.
  • Proper money management and sensible spending can lead to freedom/options in life
  • The importance of finding a balance to their mental, spiritual and physical selves (though first I have to learn how to master this myself – maybe they can teach me one day!?)
  • Be mindful of others by being socially and environmentally sensible

One thing I worry about here as a parent (haha “one thing”, when it comes to worry, I am totally this parent.…but I digress again) is that by emphasizing money, instead of making it less important and really view it as a means to an end, they will end up caring about it so much that it becomes a goal itself. Here I will hope that learning by example and by trial and error we will find some balance here that will put us over the right side of things. Only time will tell (I suppose if not we will hopefully at least we will have money for the physiologist, if needed…).

What has worked for my kids?

We have finally found a few things that have actually helped us towards these goals after trying (more than) a few things that did not work at all – or even made things worse it seemed. (They still have not forgiven me for the one party we had for them where we asked everyone to bring a used book to do a book exchange instead of toys (just a few kids also brought toys) lol. Parents however, loved the idea!).

  • Toy rotation: We have a dedicated room for their toys. All toys are easily reachable by both of them and each has ‘a place’ so nothing is ever hidden or hard to find. Then we can easily help them get into the habit of picking a toy and putting it back before they get another one (haha, “easily” – that is just code for “it works about 45% of the time” which we consider a decent success rate for this age range). What has worked really well though is just leaving a few toys out and putting the rest in the attic, rotating them every few months. So fun how they feel like they are getting new toys and they started asking a little bit less about new ones!
  • Detachment and gratefulness: Have you ever tried to tell a kid that you are going to donate one of his toys? The drama!! eek.  Recently we have started showing them, little by little (without freaking them out hopefully), the reality of our extreme fortune to be living in a first word country with health, family that loves them (as our family did for us), a roof over our heads, food and all the amenities one could possibly need or want. Once a quarter we have a bus that comes to our house to collect things we no longer use for charity, and I started to get them in the habit of donating stuff – even if just 1-2 things but THEY have to pick it.  At the beginning we had so little success that they would only agree to like 2 shirts that were WAY small for them lol. But now, a year into it they actually now come to me even when it is not time and start telling me about things we need to ‘move to that pile for other kids that are not as lucky’ (and yes sometimes they give me their sibling toy hahaha, but most of the time it is genuinely something theirs that they like). Aw!
  • Library habit: we have made it a habit to go to the library with them every few weeks at least and bring books for all of us. This has now started to include books of places we decided we may want to travel to (yes, you can totally start brainwashing them now about the beauty of travel). This is really to keep their reading habit up. For example we told our oldest that he cannot watch the Harry Potter movie or go to Universal until he reads the books. Dear lord he finished book #1 in like 2 weeks (at 7!). So now, as a reward he has a ‘date’ with mom where we will watch Harry Potter #1 with some hot chocolate, then he can read #2 and repeat.
  • Dates with your kids: We both work long hours these days and often I notice when my kids start acting up is because they have had so little time with us and not exactly quality (we are grumpy and tired at night, not our best selves when they don’t listen at all after a long day for us). We have started doing 1-1 dates where we rotate. They really enjoy these and have increased the quality time with each of the kids. The dates range from movies, lunch, ice cream, park , library, to just going for a walk (my oldest loves night walks with the phone app that names the starts and constellations), so they don’t have to be expensive.
  • The List: After a few mega tantrums at a store because we did not get some random crap they wanted to buy, we stopped buying stuff for them completely. Instead we gave them a little piggy bank and told them they will get $10 dollars a month, to write down on a list everything they ever wanted and they would have the freedom to get whatever when they could afford it. At first they were so excited, then they realized they could not think of more than like 3-4 things to put on the list. From then on when we were at a store and they asked for something instead of saying ‘no’ I just said ‘absolutely put it on your list’ and … no tantrum!! For my older child we now write down the actual dollar amount of each thing on his list and I show him two or three places on line to explain that different places may have different prices. He then has to prioritize and I help him see what he can buy now. When he is ready to buy something I give him complete freedom but always remind him that if he waited x amount of time, he would then have x money and could instead get something he wanted more. Also, I have introduced the ‘matching’ idea. If he does not spend the money in three months, I match $15 dollars to that. I have to say, this is working much better than we ever anticipated. Seriously they don’t even ask for anything anymore and when they are able to buy something themselves they seem to actually enjoy it more.
  • Money talk transparency: While I don’t tell our kids how much money we make or remind them how much things cost, etc. from time to time I do show them our budget (mint.com)  and start explaining to them super basic concepts like income and expense. For example, I put 4 chocolates on the table and I ask them to divide them as best as possible. Then I ask them, what would happen if they only had 3 chocolates. The answer was at first always ‘go to the fridge and get another one’ (pff we know the answer should be ‘give them all to mom, whatever). Then I ask, what if there were no more on the fridge? And the exercise continues by asking THEM what would they do to get more, which gives you a great opportunity to start being open about these topics and also to remind them that things are not free.
  • Experiences vs stuff: Since we stopped buying them stuff it has really opened up the opportunity for us to give them experiences vs things instead (without feeling like super Grinches since they are still getting presents from grandparents and what they buy). We have taken them on a few trips (weekend to weeks) that were total surprises. We have also tried to take them to unique things like indoor skydiving, which they talked about for months. I now include them on our travel planning – we get a globe (it is almost a lamp, pretty cool if you ask me!) and pick a country and then whatever they land on we take a few minutes to research and, if we like what we read we put the country (or state/city) on ‘our travel list’. This is getting really fun to do in the past 6 months or so and I have noticed their curiosity has increased a ton. They get particularly excited when I show them options of two places and they get to pick which one we should plan for next – giving them the illusion that THEY planned the entire thing.  I was PSYCHED when my oldest picked Galapagos for our next big thing (but we are about 2 years away – will start planning soon). Love it.
  • Waste: Ah waste. I very much dislike waste. We have solar panels so they get to see our utilization and reinforce to them to put lights off, etc. but man why do they ask for milk and then leave 1/2 in the cup? I jokingly tell them that the pregnant cow that made that amazing milk would have a giant tear of sadness for that waste. They find it humorous (I talk in pretend cow voice for this) but hopefully they an also appreciate that you just don’t just waste mom’s milk , man (introducing the idea of how much work it takes to produce something) – no matter what kind of mom! Nowadays recycling is everywhere so I actually find that for that they teach me more than i can teach them. Hooray for learning!

What is next?

  • Money Management Apps In the next few months I am going to be looking at different financial management apps for kids to try out. If you have any suggestions please let me know. I am going to go through this list and see which ones we find useful (of the free ones) and review.
  • Financial Education for Kids:  I am starting to make note of a few places that I could take my kids when ready (maybe in a few years from now) to start introducing them more deeply into how money works. For example, I hear great reviews of the Federal Reserve Monetary Museum in Atlanta. I even read about these summer camps that are all about teaching kids about money management –  I am not sure how I feel about that (but maybe you, dear reader are interested). I think I will stick with travel internationally and showing them comparisons between currencies and costs of things would be good enough instead.

What has worked for you? What has totally failed? Teach me your ways!

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