My 18-year-old daughter Alex joined me on my Toronto-based radio show a few weeks ago to talk about what she has learned about money. A few days later I got a letter from a listener who said she’d started her two children on allowances but was having a hard time letting them spend the money as they wished.
You don’t need a doctorate to teach kids about finances. There are some simple rules that apply to money and life in general too.
#1 Remember that kids are always watching you. You know that old saying, “Do as I say, not as I do”? Well, kids learn from what you do. Shop without a list and they’ll learn that when you go into a store it’s to impulse shop.
On the radio show I told the story about a young mom who plopped her 19-month-old on the counter as she was checking out. When the cashier asked mom how she’d like to pay, her 19-month-old daughter picked up a gift card by the cash and said, “debit.”
#2 It’s just as easy to learn bad habits as good ones. Browsing serves a purpose. Unfortunately, in our time-pressured world, we haul our kids in and out of stores, seemingly without purpose, always buying something. If you never leave a store without buying something, your kids will quickly learn that their purpose in going into a store is to find something to buy. You can’t then turn around and say, “Do you think we always have to buy something?” because the answer is, “Yes.” That’s what you’ve taught them. Bad habits.
#3 Explain everything you’re doing. Yes, it can become tedious, so it doesn’t have to be everything, just most things. Don’t take cash from a cash machine without explaining how it an ATM works or your kids will think “the machine just gives mommy money.” Don’t write a cheque without explaining how it works or kids with think “cheques are money.” Don’t leave a tip on a table without explaining what you’re doing or your kids will think, “daddy forgot money on the table, I better pick it up.”
#4 What goes around, comes around. If you’re truthful with your children, you have the right to expect the same from them. But if you lie, obfuscate, and only tell part of the story, why would you expect any less from them. Remember rule No. 1 and 2?
#5 Keep it simple. The more complicated you make something, the harder it is to deal with. That’s why magic jars work so well for both kids and adults trying to stick to a budget. Simply place a pre-determined amount of cash and coins in designated spending jars. Once the money runs out, the spending stops.
Turns out five rules aren’t enough…I’ll have five more next time.