Teaching Our Kids to Manage Their Money

I can’t think of a more boring topic than money management. Ugh. But Bean and Gracie are 9 and 11-years old now and it’s time we started paying more attention to this topic in their lives as they start to get older. Bean is starting middle school this year, and I can remember needing my own money for the first time in middle school. Walking home with friends after school and stopping by the gas station to buy snacks and treats or being able to buy french fries and a milkshake at McDonald’s when we walked to church choir on Wednesdays was a BIG DEAL.

Not only that, but growing up with a mom who worked in banking means you grow up knowing about money management from a young age. And we want to make sure our kids grow up with a healthy, responsible view of money.

We’ve done allowances off and on for two years now. We started by using our bead system when they were younger. If they earned a certain number of beads, they earned money to spend. At first, we didn’t give them the cash, we just let them pick something out when we went to the store. At ages 7 and 9, we started giving them actual money for them to keep for themselves. At that age, they earned $5 for every 10 beads.

When they first started spending money on their own, we pretty much let them buy whatever they wanted with their money. Chris tended to give a little more “guidance” than I did (“Don’t waste your money on that!”), but generally speaking, we let them make the choice on how to spend their money.

I remember one summer, they found an Oriental Trading catalog and pooled their money together to buy 12 magnifying glasses for $4.99 and they were STOKED. I gently advised them that you get what you pay for and $4.99 for 12 of anything probably meant it would break easily. But they could not be deterred. Finally, after weeks of watching the mailbox, their package arrived and they eagerly ripped into it, right there in the driveway. (We all know where this is going, right???) They were devastated to find 12 tiny, plastic “magnifying” glasses, which didn’t magnify anything. As bummed as they were, it was a lesson they still talk about years later – you get what you pay for and if it sounds too good to be true, it probably is. Now, they are quick to check dimensions when they order something online!

Without the freedom to spend however they wanted, they wouldn’t have learned that lesson for themselves and learning it through experience is way more meaningful that through a lecture from your parents.

Now that they are older, though, we have upped their allowance a bit. Each of them can earn up to $10 a week using our summer schedule. This is substantially more money in their worlds (and in mine and Chris’s!). Also, they now have events and circumstances to spend money on and not just toys. For example, when they go to Universal with friends and might want to buy something while they are there (Chris and I send food money along with the parents who are taking them). Or, like what just happened as I was writing this blog post! The ice cream truck came by and they both went running outside with their wallets because they had money to buy a treat with.

Because of all of that, Chris and I are taking more of a leadership role in helping the kids manage their money. When they got their first $10, Bean immediately wanted to use it along with some of his birthday money to buy a BB8 robot from Amazon. Within minutes of getting his allowance, he was asking to spend it. We told him it was a big purchase ($50) and so maybe he should sleep on it. If he still felt strongly about it in two days, then he could order it. Sure enough, two days later when he went to order it, he checked the dimensions (remember the magnifying glasses…) and realized it was actually much smaller than he was hoping and he made the decision to not spend his money. Instead, when a drone he had been wanting went on sale, he chose to buy that instead and has had so much fun with it!

We also put the kibosh on buying 10 small items from the Dollar Store, which is Gracie’s go-to. We talked about spending all her money on cheap things that she doesn’t play with for very long. Then we went up to her bedroom and we dug through all the broken or forgotten Dollar Store items from years gone past. She quickly added up how much money she had spent on these little, useless items and realized how much MORE she could have gotten if she had saved her money instead.

Gracie is a little harder to teach about money. Some of it is her age, but a lot of it is her personality. She’s a pretty impulsive spender (age) and she likes to collect TONS of the same things over and over (personality). What we’ve started doing with her is having her think of how she wants to spend her money before we leave the house or before we enter a store. For example, if we are getting ready to go into Target, I ask her what she is shopping for today. If she says “squishies,” which are her whole world right now even though they lay in a worthless pile in her bedroom, never to be played with again… but I digress. Once she has made up her mind in the car, we try to make her stick to that as much as possible. This keeps her from becoming easily distracted by things she doesn’t need or even want, just because she has money burning a hole in her pocket.

This past weekend, she knew exactly what she wanted to spend her money on. She wanted a baby doll carrier to play house with and she had seen one at Target for $9.99, so she was ready! Great! When we got into the store, though, she was adamant that she actually wanted this baby doll that she saw that was $10, too. I reminded her that she had a ton of dolls at home, but didn’t have a carrier, but she was really insistent that she “had wanted that doll for forEVER.” (insert motherly eye roll here) So, she buys the doll. The next day, she says to me that she wishes she had stuck with her original plan because now she didn’t have anything to carry any of her dolls in. I told her I have had that happen to me before, where I KNEW what I wanted and I KNEW what the best purchase was, but I became distracted and ended up with a disappointing purchase. It was a great lesson learned through real experience.

Our next step will be actual bank accounts. I think we will do those when they start middle school. We will probably get Bean one in the next few months. Chris and I are talking through what that will look like for us. Will it be a savings account (that’s what each of us had as kids)? Will it be a checking account? If it’s a checking account, will he get a debit card? Just about the only thing we are definite on is that he will learn to maintain a check register and balance his account by hand cause those are basic life skills… even though online banking makes that kind of a lost skill set… BUT STILL. It’s like driving a stick shift. You just need to know how.

Do your kids have bank accounts? What kinds of accounts do they have? How do you handle them?

UPDATE: Just this weekend, we got the kids each a Greenlight bank account. I’ll post in a few weeks how we like it, but so far so good! Use my referral link and get $10 to start your new account!