“Can we get a pack of Pokémon cards?” asks Ethan. “Yeah, can we?” adds Jacob. “Sorry, honey, not today” says mom. “Oh, that’s okay mom, I can get them” Rachel replies. “But do we really need them?” chimes David.And such is the typical conversation my wife has with our four children on any given shopping day of the week. It’s funny, but in this brief dialogue you can begin to see the different personalities of our children on display. Because each child is different, Susan and I have had to adopt a different way of teaching them about money. Here is what we have found works best for instructing our children about finances given each of their unique personalities:
Rachel –The Free Spirit
Rachel, age 13, is creative. She likes to take ordinary things from around the house and find new uses for them, such as turning them into “personalized” gifts for her brothers. She’s entrepreneurial, always looking for ways to earn a few dollars, such as setting up a stand to sell drinks and used golf balls to the golfers between the fourth and fifth hole. She doesn’t worry about money and can be rather generous with it, lending it to her parents when there isn’t enough time to go to the ATM or spending it on her brothers.
All of these are excellent qualities, but what Rachel lacks is a sense of the bargain. Because money does not concern her, if she sees something she wants to buy, and she has the money to buy it, she will. This often means buying on impulse and not considering her options. As such, she may be paying more than she has to, which may not be a big deal now when the items are little but could become a problem later when the items are more expensive.
To help Rachel learn how to comparison shop, Susan will remind her that the items she is interested in buying may be found in more than one store and that she should “shop around” before deciding on making the purchase. This will allow Rachel to develop a better sense of the “deal” while maintaining her sense of independence (which is a big deal for any teenager).
David – The Prudent
David, 12, is thoughtful. Unlike his sister, he is very conscientious of how much stuff costs. He understands, perhaps a little too well, that money is the result of hard work and not something you get for nothing. He is a good saver and tends to be more practical with his purchasing decisions.
For David, the issue is worrying too much about money. Because he knows money doesn’t grow on trees, he can begin to feel bad when mom or dad spend money on him. For example, when Susan and I asked David if he would like to go to camp this summer, he was afraid to say yes because he knew camp was expensive. For this reason, Susan and I have to be careful when discussing money around him. If we give him the impression that we have concerns about the cost of something, that raises his level of concern also. Now we are glad that he is mindful of how much things cost, but there’s a point when too much concern becomes unhealthy. We want David to know that it is okay to spend money, but it must be done as part of a spending plan (i.e. budget).
To help David develop a healthy attitude toward spending, mom and dad have shared the household spending plan with him, and we have encouraged him to separate his money into the three categories of spending, saving, and gifting. That way, he can see that mom and dad have control over the household finances, and he can feel like he has more control over his.
Ethan – The Spender
I’m sure we can all relate to this one. The kid who must think money does grow on trees because he has absolutely no concept for the value of money. He’d sooner spend $30 on a new video game that you know he’ll get bored of in a week than buy 5 used games that will end up with the same fate. And talk about being compulsive. If you’re still not sure why they put all of the candy in the store right next to the checkout counter, just take a shopping trip with Ethan.
Because Ethan has this tendency, we must instill in him the value of money. This can be difficult at age 9, especially when most of his money is received in the form of gifts, but it can be done. It starts by giving him simple tasks to do around the house like helping mom in the garden or raking grass and leaves for dad and encouraging him to look outside the home for opportunities to make money, such as walking the neighbor’s dog.
That way, when Ethan wants to spend $150 on the latest video game console, we can equate it to him having to work 30 hours in the yard. This gives him a much better appreciation for the value of money and teaches him how to delay gratification.
Jacob – The Negotiator
At the age of six, Jacob has not had a lot of experience with money. Sure, he gets the occasional gift, but at this point it’s still a scorecard and the one with the most wins! Jacob is proud of how much money he has in his wallet. He does mimic his older siblings, so when Rachel grabs her wallet for a trip to the store, Jacob grabs his. If Ethan wants something in the candy rack, so does Jacob. None of this comes as any surprise, but because he is so impressionable, it is most important that Susan and I model good financial behavior for him.
Outside of finances, Jacob has figured out that when it comes to terms, certain things are negotiable. Whether it’s his bedtime or getting a second brownie for desert, he knows when to ask for more and when to accept the offer. Not only will this serve him well professionally, but it can help him financially. If you have ever listened to Dave Ramsey, then you know how adamant he is about not paying retail. I think this will be something that comes very natural to Jacob, and Susan and I should help cultivate this behavior in the right way.
I realize that much of how our children relate to money is largely in part due to their age, but in equal, if not larger part, it has to do with how Susan and I relate to money. If our children see us spend frivolously, then chances are they’ll spend frivolously. If they see us argue and stress over the finances, they’ll probably get in the habit of doing the same when they get older. If we are generous, cultivating a charitable attitude, or prudent, making financial decisions after careful planning and deliberation, then why would we not expect them to do the same?
We want our children to know we value them far more than the money it takes to raise them. Each of them is a gift to us, and as such Susan and I are compelled to help them to have a healthy relationship with money, now and in the future. We know that cultivating this healthy relationship with money will improve their personal relationships with family members, friends, and maybe, one day, their future spouses.
For more on teaching kids about spending, saving, and gifting, see Michael Smith’s blog titled A Dad’s Attempt To Teach A Money Lesson.