Money management is an important life skill, but credit cards and online billing can make teaching kids to save money a bit of a creative challenge. My introduction to money management came from helping my grandpa sell corn from the back of his pick-up truck on the highway in front of our house. Customers always paid by cash, which my mom then took to the bank. I loved watching it travel through the pneumatic tubes to the teller! My oldest sister saved up dollars in an old jar, which she then used to buy violins as she outgrew each size. Even after we left farming life behind to travel the world, I had a lot of exposure to money since most of the countries we lived in wouldn’t accept foreign credit cards – or issue local credit cards (or even bank accounts) to people who were only living there for a few years. So my mom paid for groceries in cash – both at the open-air markets of Central and South America and in the grocery stores of Europe.
For my kids, the process is much less transparent. I only pay with cash when credit cards aren’t an option, and all of our bills are paid online. Mike’s pay check is electronic, so the only time my kids see checks is when I scan the occasional blog campaign check into my bank account with my phone. Here are a few ways we are teaching our kids money management in a world of credit cards and online banking:
Teaching Kids Money Management
Include them in family budget discussions
The online and plastic money world that we live in makes family budget discussions more important than ever! We don’t talk dollars and cents with our kids – they are still struggling with the difference between $100 and $1,000 – but they like to look at the pie chart in Quicken that breaks down our spending, as well as the bar graph showing the differences between what we earn and what we spend each month. You don’t need to crunch numbers to get kids thinking about prioritizing spending, or to help them learn that it’s important to spend less than you earn so that some is set aside for emergencies.
Have them earn their “wants”
I think it’s great to give kids gifts, but I also believe that kids can both learn and gain a lot of satisfaction from earning things that they want. We don’t currently give our kids currency allowances, but they have various ways in which they can earn tickets, which they then exchange for privileges or items that they want. Some items they can earn easily; others take a long time. My son has spent months earning a LEGO set that he really wants. I love seeing his dedication, and I know that he will truly value the set when he finishes earning it. Sometimes my kids will give some of their tickets to help a sibling earn something that they want, and I love that spirit of generosity and cooperation. The chart below is one my four-year-old just started working on (also for a LEGO set, but a smaller one). I usually have my kids propose how hard they have to work to earn something, and I find that most of the time they offer as much or more work than I would suggest.
Be honest when something is too expensive
My parents were always very honest when something was too expensive – and I consider it one of the most important lessons I learned! Because they knew how to walk away from something they wanted because it cost too much, I learned to do the same. Sometimes they walked away because they literally did not have enough money for the item or experience; other times they walked away because they chose to spend their money in other ways that they considered more valuable. Kids will learn this lesson best if you can explain why the object is too expensive. Maybe you bought something else instead recently, or you are saving up for a family vacation, educational experience, or because you want to give to a charitable organization or buy something for someone else. Maybe the item costs more than you family makes. We have had a lot of conversations with our kids recently about why we moved from a perfectly nice house with a huge yard in Massachusetts with a swing set into a condo in California – and they really appreciate our taking the time to explain the situation.
Teach them how you earn money
This is one area where blogging has actually helped! My kids know that Mike goes to an office to work, but they see me write sponsored posts, and watching the process of photographing a tutorial and writing up steps has helped them learn to appreciate the effort that goes into earning the income. They have also seen me earn money by teaching piano lessons in our home, and through photography gigs.
Once kids are exposed to the adult money earning, saving, and spending world, they will practice on their own through pretend play. My kids have been making a lot of LEGO shops, lately, and I remember creating fairly complex money games as a kid. One of my brothers even ran a bank that charged interest!
Let them see how you save money
Give your kids opportunities to see you saving money! Maybe you clip coupons for the store or write a grocery list and stick to it to avoid impulse purchases. I think it is also very healthy for kids to hear about parents giving up things they would like to save money – either to meet needs or to save up for other wants.
How do you teach your kids money management?