When to Give Your Kids the Money Chat
Peter Katevatis - Oct 10, 2014
I have two children, aged 7 and 2. The 7-year old is very bright and extremely chatty, while the 2-year old is very active and extremely stubborn. They both have been exposed to money with a clear focus on saving and spending. Too many people eq
I have two children, aged 7 and 2. The 7-year old is very bright and extremely chatty, while the 2-year old is very active and extremely stubborn. They both have been exposed to money with a clear focus on saving and spending.
Too many people equate spending with wealth. Clearly when Dennis Washington spent $200 million to renovate the Atessa IV, he has wealth and likes people to know it. However, I know several wealthy individuals who dress modestly and drive 8-10 year old vehicles. You can’t judge a book by its cover.
I have had the privilege of being my 7-year olds baseball coach and assistant soccer coach over the past few years. Besides the obvious benefit of spending time with my son, it has given me an opportunity to get to know several other children who are the same age. I find it interesting how different their lifestyles and experiences have been outside of school. Some kids don’t have cable TV at home while others have an online gaming budget to play the most current version of Minecraft. Through these interactions it, has become apparent that very few parents have taken the time to teach their kids the value of a dollar.
You often hear stories of the 'Me Generation' and their sense of entitlement. I feel this is a direct result of children not learning the value of work and parents just giving them all the “stuff” they have. They ask for stuff, they get it. Allowance is given and not earned. It is easier to give your kids things (especially if they are whining), but what damage is that doing to their sense of value?
As early as the age of 5, children can understand budgeting. Grandparents, Aunts & Uncles, neighbours, the Toothfairy can give your children cash from time to time. These are the opportunities to give your children the Money Chat. If they have some cash to spend ($5 or $20) go to a store like Dollarama , Walmart, or Target and let them buy whatever they want. You will witness a child torn with the attempt to maximize the utility of money. They will try to get the most of the best stuff for the least amount of money. All you need to do is block out an hour or two and have extreme patience.
As my 7 year old was toiling with the hardest of life decisions (Batman vs Spiderman) we strolled down the Lego aisle. I mentioned to him that since he loves Lego maybe there is something here he would like. His reply was a simple, “Oh no Daddy, Lego is much too expensive.” Another mother, trying to console her whining son, overheard his answer (he talks really loud) and asked me, “How do you get him to say that?” The answer… he figured it out on his own.
As kids get older empower them to make their own spending decisions. They will learn to separate their needs from their wants. If they want a $300 pair of jeans they have to earn the cash themselves.
Also, do not forget to teach the value of giving, but I will elaborate on this one another day. Maybe when my Movember ‘stache is growing in.