“She’s my expensive one.” The mother sitting beside me at the local community pool points to one of her three teenage daughters. “She’s the one who just has to have clothes from the GAP. She won’t wear anything that doesn’t have a designer label. The others are happy with what we can get at Penney’s or Sears but not her.” The mother is clearly exasperated. I ask her what she does about it. “There’s nothing I can do,” she says. “She just won’t wear anything else so I have to get her what she wants. I’m just glad the others don’t care.”
This mom wasn’t asking for help. She just wanted someone to commiserate. Off duty, I do just that. Advice that isn’t asked for is usually not welcomed. So, I make some sympathetic noises and change the subject to how well the girls are swimming and what would be nice to have for dinner the way moms do who find themselves idly sharing on a summer afternoon.
Dr. Marie Hartwell-Walker is licensed as both a psychologist and marriage and family counselor. She specializes in couples and family therapy and parent education. She writes regularly for Psych Central as well as Psych Central’s Ask the Therapist feature. She is the author of the insightful parenting e-book, Tending the Family Heart.
Editor: Muhammad Talha
But later on, I couldn’t help thinking about the interchange. If the mom at the pool had asked for advice, I would have told her this: Children don’t learn the value of a dollar as long as it seems that Mom and Dad have it to dole out in endless supply. When parents stay absolutely in control of money, kids grow up believing that when parents say no, they are being mean, not that there is a limit. The kids whine, plead, beg, charm, and tantrum because they’ve learned that these tactics will usually extract money from the Mom & Dad Bank and Trust.
Two events in our family got me thinking about how to train children about money. I remember the first time my oldest daughter, then 4, wanted some money for something at school and I didn’t have the $5 in my wallet. When I told her I didn’t have it, she was absolutely incredulous. Then she said, with all the earnestness and sweetness of a 4-year-old charmer, “Well, you can just go to the money machine.” I realized that she thought money was in endless supply at the ATM and that she had no concept of how money worked.
Then there was the first time my then 80-something grandma asked me to help her with her checkbook. She couldn’t figure out why the bank kept telling her she was overdrawn. “I still have all these checks, dear,” she said. A traditional woman who had gone from her father’s protection to her husband’s, she had never had to manage money until she was widowed. Disoriented by age and change, she had the idea that as long as she had blank checks, she had money.
Although these stories have become part of our family folklore and humor (“But dear, I still have lots of checks . . .” when either my husband or I want something we can’t afford), they also object lessons for me about the importance of taking the time to school our children in the use of the money just as surely as we make sure that they know how to read and write. Lessons in how money comes and goes can be a part of family life from the time children are in preschool. As with many things about child-rearing, I try to think about what I want my kids to know by the time they graduate from high school and work backward from there. No child should leave home without the fundamental skills of how to:
- work within a budget;
- pay bills;
- save for what you need and want;
- save for a long-term goal;
- balance and maintain a checkbook;
- establish and maintain good credit; and
- comparison shop to get the best value.
They should also have a realistic understanding of just how much it costs to support themselves and some direct experience with earning money that they need.
To meet these goals, I think we need to revisit the idea of allowances. In many families, an allowance is a little spending money that the child is free to spend on her- or himself. Sometimes there are some chores attached for earning it. But, in my experience, not enough families use allowances as an important teaching tool.
Think about an “allowance” being defined as the amount of money the family can allow each child to have control over in order to learn how to budget and manage money. To get a realistic look at what you are already “allowing,” make a list of all the times in the week that you are reaching for a wallet and how much you hand out each time. Add up every soda, every school lunch, every activity, every time a child asks for and gets a treat, every birthday present, every school request, etc. There’s usually an impressive gap between a kid’s allowance and what the child really gets to spend every week.
Now work with your child to decide on a lump sum that will be given to her or him every week like a paycheck. Make a list of the things that your child will have to pay for out of that sum and what will be left over for her or him to spend on her- or himself. Now you have the beginnings of a budget. A 3-year-old might be given only $1 a week that she is expected to divide between a piggy bank, the church collection plate, and a weekly treat. For a senior in high school, a budget might include an allotment for clothing, school lunches, certain activity fees, and part of his car insurance. As your child grows, expenses do get more complex and the “paycheck” should get revised to reflect new realities. Each shift in income and expenses can and should become a new lesson on how money works. The system is working when you don’t find yourself reaching for your wallet between paydays except for extraordinary, unforeseen expenses.
Of course, the system you develop also has to take into account each child’s personality and maturity. One of our kids started his own savings account when he was about 6. In contrast, his brother seemed to have holes in his pockets. Our saver would sometimes go without things he really needed because he was worried about having enough money for the end of the week. We needed to help him really understand a budget so that he could have confidence that if he stuck to it he would have what he needed. For the spender, we discovered that having to manage money for a week at a time was initially too difficult. He’d spend everything in the first three days and then have to go without lunch for the rest of the week. Although that was a good object lesson for a week or two, it became clear that he wasn’t mature enough to handle a week’s worth of allocations. He, therefore, got half his allowance on Mondays and half on Wednesdays until he learned to manage funds for a longer stretch. Two different kids — one needed help in letting go of money, the other needed help in holding on to it.
The next step in money education for your child is earning at least a part of what is needed to cover expenses. In my family, for example, kids are helped with money for gifts until they get their first job. Then they are on their own. Gradually, they become responsible for some of their clothing, for all of their entertainment, and for making major contributions to their savings accounts for their college educations. Other families I know give kids enough money for major clothing purchases (like a coat), but turn over responsibility for earning money for most of their clothes to the kids by the time they are in their teens. Other families pay a portion of their kids’ car insurance but expect their kids to earn the balance and to cheerfully give rides to siblings as part of the deal.
Any system works as long as it is clear. What’s important is that the kids be given the opportunity to learn about income as well as outgo. It’s often quite a revelation just how long it takes to earn $10 and how short it takes to spend it. A teen who understands it takes four hours of flipping burgers to get that new CD has a very different perspective on money than the child who is given everything he or she wants.
As you and your children work together to develop their money management skills, you can add lessons in the use of a checkbook or credit card, making good purchasing decisions, managing savings, and maintaining a good credit rating. One mom I know includes her kids in paying the monthly bills. They have helped write the checks, address envelopes, and make entries in the family ledger since they were 8 years old. Another family gets everyone involved whenever there is a major purchase to be made. Kids help research the item by reading up on it in consumer magazines and comparing prices at different stores. Still, another family has helped each of their teens take out a loan so that they could get experience in making monthly payments and could each build a credit history before leaving home. What all these families have in common is a commitment to educating their kids about the realities of money.
Good money management is an ongoing challenge for most adults. By starting this training early and providing support along the way, we can help our children build solid financial skills for their futures.