Beyond The Allowance: Raising a Frugal Kid
Mrs. Frugalwoods here: I’m delighted to welcome Shannon McLay from Financially Blonde to share her strategies for raising a financially astute kiddo. I’m pretty sure her son knows more about personal finance than most adults, so I was most grateful when she agreed to write this for the Frugalwoods audience. Enjoy and be sure to check out Financially Blonde afterwards!
I love my son more than life itself; however, he was one of those kids who truly embraced the “terrible twos” and then aged right into the “trying threes.” He challenged every last decision we made for him except his clothing choices. Miraculously, he did not have an opinion on his outfits.
He is my first and only child and as most parents know, there is no handbook for making the best parenting decisions and rather than read books about his behavior, I chose to take the organic approach and go with what felt best to me. Not surprisingly, what felt best to me was that I was always right and he was always wrong, and I knew that every push back was a battle and the only way I could prove my superiority was to win each battle.
Fortunately, my hubby was, has been and always will be on the same wavelength as me as far as winning battles at home, so we had multiple dinners that ended with all of us crying at the table. I was never embarrassed to leave Target when my son was acting up about something he wanted, and when I made a threat about a punishment, I always carried through on it, including throwing a new toy down the garbage chute at our apartment building. It was not one of my finer moments, but I was determined to win each and every battle at all costs.
The good news and silver lining to all of this home drama was that it paid off. Once my son crossed over to four, the painful lessons he learned through each battle finally started to sink in and he began to understand who was in charge at home. Little did I know that these battles would present the perfect training grounds for teaching him about good money habits.
You see, in training my son to understand that I was in charge, I was learning the value of patience in educating him. Even though we had the same dinner battle every night for 740 nights straight, he didn’t start to learn until night 741, and I developed the patience to wait 740 nights until he did learn. I employ this same patience with our money lessons.
Surprisingly, he is much more receptive to money conversations than he ever was to eating his chicken, but I still have to remain consistent in what I am teaching him. When Will turned five, we started having money talks with him. As he received cash gifts from family and friends, we decided to let him use the cash as he wished. We kept his cash in a plastic sandwich baggy and allowed him to make his own choices.
As I shared on my blog, this led to a disastrous fail on his part of spending every last dollar. He was devastated to realize he had nothing, and I was excited for the teaching opportunity presented to me to help him learn about making smart money choices and saving versus spending.
A year later, his baggy grew to all-time highs, and he was so proud of himself that he celebrated by spending more of his money; which led to another great teaching opportunity that I took advantage of and we spoke about earning more money and selling some of his toys on eBay.
Another year has gone by and we are now discussing investing some of the baggy money in a UGMA account where we will allow him to pick the stocks he invests in and we will review his account with him quarterly just as I would with my clients.
As I tell many people, my son is the most Financially Fit person I know and it fills me with great pride to watch him make money choices and have in-depth conversations with me about his money. However, it has taken a great amount of teaching and patience from my husband and me to get him to this point. Just as he now eats everything that is put in front of him for dinner after 740 nights of fighting, he now makes informed money choices after 740 days of money talks.
We cannot expect our children to understand money or make smart money choices if we only talk to them about it on holidays or every other weekend just as we cannot discipline them and teach them proper manners if we only do it every so often. You need to make money talks a central theme in your home and look for opportunities all the time to teach a new money lesson.
Our neighbor drove a new car to the bus stop a few weeks ago, and I shared with Will that we would never drive a car like that. He asked why and I plainly ran through the numbers with him and explained that we could travel to Italy multiple times for that one car and asked if he would prefer Italy or the car. Not surprisingly, he chose Italy.
We have been speaking about money with Will for three years now, so this subject is far from taboo, and I think that is healthy for him and for us. As he ages, we include him in more family finance decisions and ask for his opinion, and this not only helps him with his own money choices, but he learns how we make them as well. Our conversations have evolved as he has because we have made it a habit it our home to continuously teach him good money skills just as we made it a habit to teach him good manners.
How often do you have money discussions in your own home? What financial lessons do you hope your kids learn?
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