Teaching Money Management to Kids

I’m pleased to be caught in the middle of the great money debate – spenders vs. savers. My two oldest could not be more polar opposites when it comes to money and stuff.

My 6-year old son took me on a date recently and I shared the picture of us together on Instagram.IMG_0464

thehomelearner This boy is a saver. He never asks to spend his money on toys or anything. But today he’s splurging. He’s taking his mom on a date. #Keeper #LoveHim #MiniMan

After that, I received a lot of comments and questions regarding how to teach kids good money handling.

I felt kind of shy to admit: we really don’t officially follow any expert methods. My best intentions were to have already read this book and this one too because I fear I’ll wake up in my 50’s and find my kids have made the same mistakes with money that I have.

My daughter is 7-years old, and she spends every penny in her hot little hand. My son, however, has money in his wallet (not his savings or piggie bank) from his 3rd birthday.

Polar opposites in money handling – one is a spender and the other is a saver. Here are 7 ways we naturally teach good money management to our kids:

#1 Always make a plan.

For the spender, I just instituted a rule that she isn’t allowed to go to the store with money to spend without a plan. She must make a list and budget and then she may spend. Otherwise, if she doesn’t see what she originally wanted she just picks any old thing off the shelf just for that “getting something new” feeling. We just had to put stop to that. Not only was our space getting too crowded (still is, more on simplifying soon), but she also lost interest in her new something the very next day after purchase. Now she’s better able to plan and save up first. Even if she just wants to save up $3 to buy a grab-bag toy, we ask her to make a plan.

#2 Always compare prices.

While shopping with my kids, I have them compare prices for me. They beg to be given the name of a product we want to buy and asked to find the best deal. Then we talk about the differences in prices – even between stores, there are things (Benadryl, for example) I only buy at the Dollar Tree because it’s a dollar!

For the spender, I’m teaching her about saving in a way that has immediate benefit. I don’t try to impress the value of long-term savings and expect her to jump on the chance to put half of her earnings “away for a rainy day.” My single goal for her right now with money is to engage her mind in the process of making money decisions.

For the saver, it’s a thrill to be able to keep even more money in the pocket when searching for a product we’ve decided to buy.

#3 Always talk in positive future terms.

It hasn’t been helpful to my spender when I have talked disparagingly about her choices. Even though, I sincerely dislike the purchasing of knickknacks. When my words are negative – she responds either slumped under shame or kicked back in rebellion. I’m not saying that I don’t discourage her from buying silly things, but after she has made her choice – I do not bully her about it. I’ve learned that if I wait long enough, the conversation about the item she bought will naturally come up and I’ll be given the opportunity for a teachable moment.

#4 Teachable moments can’t be forced.

I’ve learned that when I talk to her about money, I need to talk about how what we choose to buy has the power to bring life or bring bondage. More stuff means more to take care of. Even though I don’t mind if she wants to buy a new toy – she needs to understand that she’s making a commitment at the checkout. Not only is she choosing to bring that item home with her, but also to take care of it for better or for worse.

Many good money management lessons have been taught over tidying up her bedroom. It’s impossible to be a spender, buyer-of-knickknacks, and avoider-of-tidying. I put the 2 things side-by-side for her to realize: buying stuff means tidying stuff. The more you buy, the more you tidy.

#5 Money exposes what is already in our heart.

For the spender (in me and my daughter), our heart is bent toward greed. The I want what I want, and I want it now feeling. It isn’t pretty, but through careful practice that feeling can be taught to sit still and wise up. I don’t think I will ever fully grow out of being tempted by greed, but I do think that by keeping my mind active on #’s 1-4 for my own money management – I give myself a fighting chance to recognize it for what it is long before it has a grip on my heart.

My saver-son needs to learn to know his heart about money too. He does not love accumulating toys. He has no need for knickknacks. Teaching to his heart on money is trickier because it has less to do with discerning behavior and more to do with softening his attitude. He doesn’t realize it, but because he knows his spending behavior doesn’t require work to reform – he gets puffed up by the fact that his way of handling money is best. Arrogance in storing up wealth is displayed in his words and attitudes. He positions himself as superior to his sister, and now we have bigger problems.

#6 Money management is tied to relationship management.

All money is connected to people somehow. The most important rule I follow with teaching these two side-by-side is: avoid comparing them to each other. Nothing sparks rebellion or adversity more than putting them nose to nose on any topic. When they start talking to one another about money, I try to separate them and put myself in the middle. Even if they are sounding positive in their conversation, it just isn’t a safe topic for them to try and learn without adult supervision.

Also, as I mentioned in #4, money is a tool that can used to bring life or bondage – this pair has consequences for those around us too. If I spend my whole “grocery budget” on new gadgets – what will my family eat? I’ve bound them to suffer scant meals because I couldn’t say “no” to my own greedy desires. The use of money always has an effect on the people around us.

#7 Recognize what they do well with money.

One of the similarities in their heart for why they spend money is the same: generosity. My son, as the picture above recorded, loves to spend his resources on experiences. He is quick to offer his wallet if that means we get to go somewhere for an event – rides, food, fun – to him it is money well spent on himself and others. My daughter, if she hears of a party – birthdays, showers, weddings, etc. – she immediately creates a plan to buy gifts, assemble goodie bags, and design decorations. They each love others well through the use of money.

I teach the saver the same lesson about generosity as I do to the spender but in completely different words. The message is the same for each, but the delivery is unique. At their current ages – 6 and 7 – they are in the knowledge stage. They just need to know the facts about money: limits, plans, and stewardship – like what it means to be generous with and without using money. As they grow and practice, they will gain understanding through their own experiences in success and failure. And my hope is that by the time they are my age, they will have a good grasp on wisdom in the use of their resources.

So when I received questions about how we taught my son to save, I carefully thought through all the conversations I’ve had with my kids – and found that the main focus for money handling was their character. Sure, it is a challenge to raise a spender and a saver in the same home, but simply comparing and contrasting the two may outline an action plan for each but it doesn’t change their heart.

What is in the heart – before a single cent is in the hand – determines the value of money.

Disclosure: affiliate links are used in this post and set apart by underlining. There is no additional charge for clicks or purchases you would normally make. Thanks for reading!

I highly recommend the Money Saving Mom’s #MakeOverYourMornings course – check it out!

For more encouragement from The Home Learner, click here.

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