In a recent blog I asked you to tell me what kids-and-money problems were on you mind. You reached out with questions ranging from humorous to serious. Over the next several months, I am going to address some of your issues as well as other letters I have gotten through the years.
A young mother in New York wrote:
My 14-year-old daughter just doesn't understand the importance of handling money responsibly. We had a family beach vacation this summer. My kids saved allowance and gift money so they would have their own spending money while we were away... they knew I wasn't going to be buying them souvenirs and extras.
My daughter had put aside $100 for the trip and got it in her head that she wanted a $100 dollar bill. I told her that would be difficult to cash in some places, but she insisted... I took her to the bank to get the large note.
She carried that money with her everywhere, but every time she wanted something small she asked me to pay for it... $3 here, $7 there... she didn't want to break her bill. I told her that wasn't part of the agreement, and that I would lay out the cash but she had to keep track and pay me back at the end of the trip.
On our last day, she was hysterical because she couldn't find her prized $100 bill. We searched all her pockets, the hotel room and the car. Gone! I felt so bad for her that I forgave her debt to me, I don't know if she learned her lesson.
Dear Sucker-mom, no, she didn't learn her lesson. I commend you for starting out well by letting your kids know that they had to budget and spend their own money on the trip. This is a great real life money lesson. Unfortunately, your first mistake was giving in and allowing your daughter to "run a tab" with you instead of insisting that she break her bill or go without. Your bigger mistake was forgiving her debt. I'm sure you were upset that she was so upset, but she needs to know that in real life, debts aren't forgiven.
This note is from a dad in California:
I have five brothers and sisters -- our parents both worked hard. We lived modestly, but never went without. They never talked about money with us. When I asked for something -- a new bike, for example -- they never said "We can't afford it." They always said "You don't need it," or "What's wrong with your old bike?" I thought they were mean, or out of touch.
When I went out on my own I was overwhelmed at how much things like insurance, taxes and electricity cost. It made me appreciate my folks even more for what they gave us, but I wish they had explained things to us. Now my wife and I have a son who is 11. I want to talk to him about money. When he wants a new bike, I want to explain how long I have to work to make that money. My wife is like my parents -- she says he's too young to have to know about "real life" and that parents should give their kids everything they possibly can. We argue about it. I think my kid should know the value of money. I don't want my kid to think I'm mean, and I also want him to be prepared to live on his own when the time comes.
California Dad, I agree with you. Parents have many reasons for not talking to their kids about family's finances -- "We don't want to take their childhoods away from them." Or you may have been taught, "Polite people just didn't talk about how much things cost." Anything that involves money, and exchange of value, can be used as a learning tool -- if you take your kid out to dinner, show him the check. You can explain the tax and tip. For younger kids, it's a math lesson. Kids are never too young to start learning about money. Shielding your child from the cost of things can keep him from getting a good start of their own, when the time comes.
From a mom in Massachusetts:
My husband and I have an awesome son. We are always tempted to give him anything he wants, but my husband and I agreed early on, that the best thing we do for our son would be to teach him to be financially literate.
We have been reading your books, and now your blogs, since our kid was in diapers. We lived though the "I want, I want" phase and on to high school with relative ease.
He keeps a budget with his allowance money and extra money he earns doing odd jobs around the neighborhood. When he wanted a new skateboard, I suggested I would buy it for him at the end of the school year as a special treat. He thanked me, but said that he'd saved up for it himself! This boy never asks for anything. My husband raised his allowance by a dollar a week to show him that hard work and doing the right thing pays off.
Thank you for sharing your tips and knowledge in a straightforward, accomplish-able way. It works!
It's so nice to hear success stories. Congratulations to this whole family. It seems like they really get it. Teaching your kid to be money savvy is a gift that will last a lifetime. Since you read my books, I hope you are also teaching the importance of charity and giving back, which should always be incorporated. I suggest a kid should automatically set aside 10 percent of his allowance and earning, to be used for charity.
Please continue to send me your kids-and-money questions and anecdotes and I will discuss them here periodically. In the meantime, please use the space below for comments on this blog.