I’m a dad of two girls:
Raising them to be confident, strong, creative, smart, ambitious, thoughtful, financially wise, friendly, resourceful, curious, caring and successful human beings isn’t always easy. I could talk about any one of those goals for a long time, but this blog is about money, so let’s stick with that. And dinosaurs. They’re banks, so it’s related:
Earlier this week, I posted over on Debt Discipline about what I’m doing to teach my girls about money. At the ages of 8 and 11, I’m still figuring it out. And hell, I fully admit that I make much of it up as I go along. I have to. They’re very different humans. What resonates with Older Daughter makes Younger Daughter angry.
Older Daughter loves money. Younger Daughter is afraid of it (this is the truth).
There aren’t many easy answers, but I’m trying.
Anyway, what are you doing still here? Read my thoughts on teaching kids money skills over at Debt Discipline.
Join the 10s who have signed up already!
Subscribing will improve your life in incredible ways*.
*Only if your life is pretty bad to begin with.
Thanks again for the guest post! You’re leading by a good example for your girls!
Brian recently posted…Why Financial Health Matters to Me
we’re a kid free family by design so i’m just an observer. my friend down south struggles with the “expensive outing” dilemma. they have a comfortable place to live without money troubles and every time we visit the lack of cheap plastic colorful junk toys is notable. those kids are just outdoors all the time and are perfectly well adjusted. the problem comes when one of them is invited to little timmy’s (or johnny or susie) birthday party at some bullshit like a trampoline park for some sugary drinks and crappy food and it turns into a hundred dollar outing. it’s not like those activities break the bank but i can tell it kills my buddy to participate but he can’t say no to his kids every time. you ever get invites like that?
freddy smidlap recently posted…The Silver Lining of a Late Start to Financial Independence
Yeah, we do. It’s more often than I like too. Some folks are OK just going to a park, but others have to spend money every time. And like you mentioned, some of these activities aren’t cheap.
We downplay the money aspect and go along with it. I want our kids to have good relationships with other kids and not feel awkward. If I have the opportunity, I try to steer other parents away from $50 playdates. I’m not overbearing though.
It does make me sad that parents think they have to spend money to make their kids happy. More than anything else, kids just want your time.
Mr Cheapo 😛 Very funny 🙂 Very nice story. Good luck raising your two girls!
The Poor Swiss recently posted…Redesign of the blog and Pinterest
You can call me Mr. Cheapo any day of the week! 🙂
I got called cheap last week….I had to remind the person I retired at 52 and my house was paid off. That shut that conversation down pretty fast. That and the 15 day Italian vacation I took my family of 5 on last summer….thank you credit card points!
Love it! The best way to combat this stuff is just to continue living a good life.
My sisters don’t call me Mr. Cheapo anymore. 🙂
That, right there, is the target! Live well and detonate others’ expectations. Well said.
Nice write up, Hit home for me as I am working on this with my daughter.
FIbythecommonguy recently posted…Dividend Income Update – March 2018
I set up a Cap360 Acct linked to mine and they get allowance and see it on their app on their “phones” (old iPhones without cell device). They get a little interest so we talk about that too. I’ve also let them know we don’t buy on credit to introduce them to the concept.
I’ve had a (mostly) great time teaching my daughter about finances the last few years. I took several concepts from different books and tweaked them to my liking and we continue to tweak the overall plan together based on how each year goes and what works. The most important thing I’ve learned is to stick with it for a few rounds, but then be willing to make a change when something doesn’t feel right vs giving up on it.
Basics: I give my daughter a salary every two weeks – just like she’ll likely have as an adult. I calculate the cost of what I expect her to pay for each year and break that up into 26 payments. Since her responsibilities increase each year, she also gets a raise each year (her fiscal year follows the school calendar – there’s too much going on in January between school and normal life to change a financial plan). She takes 10% and puts it in a give envelope, 50% of what’s left to go in a save envelop, and the rest goes to her responsibilities and then spending.
Give: It is entirely up to her how she wants to use this money as long as it’s for a true giving purpose (buying soda from her school fundraiser doesn’t count). She’s donated to the Alzheimer’s Association in events we both participate in, she’s bought items to take to our local humane society, and she’s turned $100 into pennies at the bank to put in her school’s penny drive that went to help kids of abused families (yes – this was a competition and her class won donuts so she still benefited, but I figured it was more of a give than personal gain so I agreed). This is an area I have learned to be flexible in so she enjoys giving and hopefully creates a life long habit.
Save: This money goes into her savings account every $100 or so. This savings account is 100% her money and not combined with the savings account I started for her when she was born and will hopefully be used for college one day. This is not an account she can take money out of for clothes, electronics, etc….The rule has been set that we’ll discuss it when she’s older but may be used for things like a car, an agreed on amount toward prom, travel opportunities – those “big” things. I admit, I do take the opportunity when she gushes over her growing balance in the bank to remind her that’s the exact same amount she gets to spend.
Responsibilities: We started small here, her first responsibility was to learn the different between needs (new shoes after growing out of old ones) and wants (the Adidas that everyone is wearing this month) and she was responsible for all her own wants. For larger things, this meant creating a new envelope to ‘save’ for that want (but it didn’t come from her actual save envelope/account) and it took time. At 9, she saved $100 to build a fort in her room; at 11, she saved $80 for a guinea pig. Each year, we added a new responsibility to that list. At 13, she is now responsible for her own wants, gifts for friends, clothes & make-up, school fees, and hot lunch at school. Each of these responsibility envelopes has a minimum that must be maintained (this was a middle of the year tweak when she didn’t have $8 for a school field trip, but I didn’t want her to miss the opportunity). When she gets paid, she checks each envelope and once they are all up to at least the designated minimum, she can take any leftover money and do what she wants with it – lately as a new junior high student, this all goes in a basic spend envelope and is mostly blown on vending machines and concessions (another constant learning for me – I have to live with the “down side” of my own rules and let her make her choices).
It’s been very interesting watching her priorities change. When I bought gifts when she was invited to a birthday party, she picked out the $50 items (no – I never actually bought these, but usually settled around $20). When she was responsible for this, she was completely content picking up a few random things from the dollar store (usually candy) and putting it in whatever bag she could find around the house. Lunches are new this year – she can take the time to make a lunch at home and thus have extra money to do what she wants with, or she can buy hot lunch and replenish the account. My only rule, is she must have a real, nutritious (as much as can be with a school lunch) meal and not chips and candy from a vending machine. She started with hot lunch because she was consumed with getting ready (also the first year she’s been allowed to wear make-up), then made her lunches for awhile and really enjoyed the extra spend money, then turned 13 and was allowed one social media account so went back to hot lunch because she didn’t have time to make cold lunch before school, and has recently been taking cold lunch again.
She has started babysitting and the same percentage split is applied to her earnings from that job. I’ve also set the expectation that if she chooses to get a job when she’s older, the same percentage splits will apply.
I have learned no matter how hard I try, I cannot control grandparents, which completely goes against this plan. Between money gifts and shopping, they just don’t comply. I have yet to find mental acceptance there.
I’m also trying to find a way to transfer this to an electronic plan. While I know it’s possible to stick to cash for life, it’s more realistic she will eventually turn electronic and I’d like to prepare her for the world of plastic and how to be successful in it. I haven’t yet figured out a reasonable way to transfer an envelope with a tracking sheet taped to the front to using a debit card and keeping responsibilities compartmentalized. Eventually, we’ll move her Republic Wireless account to her own name, so maybe that will be the forced start and we’ll figure it out as we go.
There are times she talks about how it’s unfair or I hide in the closet in tears after telling her she can’t go to the movies with her friends because she doesn’t have money but those moments pale in comparison to when I hear her explaining to her friends how her money works and brags that she pays for things with her own money. I’ve even heard a couple friends comment that they wish their parents did that instead of just handing money over. I hang on to those thoughts in the difficult times when I want to scrap the whole plan and take the easier route of just paying for things as I feel fit.
I know I can’t control her spending as an adult and I know she’ll make different choices than I would and probably make some pretty dumb mistakes. My hope is I provide her a solid foundation she can return to when she makes these mistakes and wants to reset and get back on track. Heck, when I see I’m overspending, I still revert back to cash for a reset. Sometimes our financial health just needs a good cleanse!
Wow, it sounds like you’re killing it. I love the part about how you stick to your guns for stuff like movies. I’m sure that’s hard, but wow, what an important lesson! You’re a good mom and while it can be difficult now, you’re making HER life so much easier. A little bit of pain now for a lifetime of lessons…
Regarding electronic, have you heard of FamZoo? http://famzoo.com/ While I haven’t signed up yet, one thing I really like about it is the ability to give your kids interest (you set the rate!) to teach them about investing.
I haven’t; but thank you – I’ll check it out!