Teaching Kids Financial Responsiblity

It’s funny how the universe works sometimes, isn’t it?  Last evening, the Littles and I had a short conversation about allowance.  Now, we don’t give them allowance though they do have chores.  What?! You may ask, aghast.  But here’s the thing.  A household is a large and difficult responsibility to run, especially if you have a farm with animals and gardens and the like to care for.  I am not giving my children chores so they can earn money.  I am giving them chores because they are part of this household and I don’t want them growing up thinking the cleaning fairy is going to come to their dorm room/apartment/house and take care of everything magically while they are out having fun.  I don’t want to raise men who expect their wives to do all the housework or who can’t take care of themselves if they don’t have a wife.

Also, I want the Littles to learn, just as Big did, that a household is a team.  Teamwork is an important lesson to learn when you’re young, and ensuring that your littles get that they’re part of the family team means you are teaching them how to pass the ball when they need to and how to go for the goal when it’s their turn.  So they have chores.  It is part of their job as a team member.  I do not get paid for doing a load of laundry.  They do not get paid for folding it.

So I explained to them that I don’t really believe in allowance.  I believe if they want extra money they can come and offer to do a job equivalent to the amount they need and we will work something out.  But their daily chores are just part of life.  They get it.  They weren’t asking for allowance, anyway.  They aren’t spoiled, but Martin and I tend to go without luxuries so the Littles can have a good childhood, so they feel ‘paid’ enough.  They were really just trying to understand the concept.

Here’s where the weirdness of the universe comes in.  I am a big NPR nerd, and I listen to it whenever I am in the car, no matter what program is playing on our local station.  Today while I was running errands, the Diane Rehm show did a feature on teaching financial responsibility to young adults.  How–creepy–is it that I was just talking about financial responsibility to my kids and then heard a program about it?  In love with that.

Anyway, there were three experts on the panel, and one was a college professor who believed that financial responsibility should be added to public school curricula.  I remember learning to write checks and balance a checkbook in a high school class, but that was more years ago than I’d like to admit… Do they not teach it anymore?  A second expert said that he was loathe to add another burden to the already overburdened public school teacher.  At first, I was a bit miffed.  Isn’t teaching kids how to live in the real world part of their job?  I  mean, yeah, personally I feel that is the parents’ job, but if you’re sending your littles to public school to learn about the world, shouldn’t they be learning about the world?

Then I thought of all the teachers I knew when I was working in the public school system.  The harried, hurried steps to make yet another common core meeting.  The frustration of knowing they had to leave some students a little bit behind in order to keep their classes ‘average.’  And yeah, maybe that guy was right.  Maybe teachers don’t need another burden.  They’re having a hard enough time making sure all their students can read.  And that’s not their fault, believe me.  It’s the fault of the system.

So it comes to us as parents to teach our kids how to be responsible with money.  The experts on the radio show had a lot of really good ideas.  Put aside three money jars for each kid.  Label one ‘save,’ one ‘spend,’ and one ‘give.’  When your child gets money from allowance, birthday gifts, what have you, have them divide the money up into each can.  When they have enough in the spend jar to buy something they really want, let them buy it.  When they have enough to make a decent donation to a worthy cause, take them to donate it.  Make them save the money in their save jar until they are ready to move out on their own.  Not too shabby an idea.

One of the panelists suggested having your teen get a job and give a percentage to you out of every paycheck for rent, groceries, etc.  That way they won’t experience culture shock when it’s time to move out on their own.  I had never really thought of it that way, but it actually isn’t a bad idea.  I was lucky that when I was a teen my parents did not buy me a car but helped me find a job and then get a loan to buy my first car myself.  I can’t thank them enough for giving me that opportunity to learn about making payments on time before I had to make rent.  They taught me that buying a child a car does not necessarily help the child–it certainly doesn’t teach the child financial responsibility.  So when Big wanted a car, he got a job and a loan and got his own car.  And he paid it off early!  He paid his own insurance and gas money.  We didn’t take a percentage of his check for room and board, but he learned about making his payments and what it means to owe money before he moved out of our house.

That’s something every child should learn in some way before they leave home for good.  We may think we’re doing them a favor by providing for them and not letting them worry about such things until they have to.  We’re not.  It is such a struggle (remember?) to suddenly be responsible for All the bills and All the cleaning and All the… everything.  It takes most people up to a year to get the hang of it once they get out on their own.  They go into debt because they don’t realize that credit cards aren’t free money.  They end up with bad credit because they don’t understand the minimum payment thing.  They sometimes even lose their first apartment because they just don’t understand why they can’t pay their rent a little a lot late.

Another fantastic suggestion was to have your littles sit down with you while you make out your monthly budget and pay your bills.  Let them see how much you have coming in, how much you have going out, and where it’s going.  I know some parents want to hide such details from their kids, but really, what good does that do them in the long run?  If they think your food, electricity, internet, and water come magically, or that your debit card is a magic money tree, they will not understand when they get out on their own why they should budget.  It might give them a worry-free childhood, but it sets them up for disappointment as adults.  Besides, if they get a grasp of where your money is going and how much of it is actually spent on them, they might start asking less for extravagances.  Win-win.

Teaching your kids while they’re young what it means to make on-time payments, how to save and be patient, how to recognize when they have a little extra to give to someone who is in need… These things will help the transition from ‘mom’s house’ to ‘my house.’  Maybe they won’t make the same mistakes we did.  Maybe they’ll have a better grasp of reality.

As for my Littles, at least they will know how to take care of themselves.  The shock of actually being the person who has to sweep and vacuum won’t be so hard on them.  And if I play my cards right, they will have a firm grasp on what it means to be financially responsible.  I have to do some more thinking on this room-and-board thing… What if you told them it was room-and-board and secretly put it into a savings account for them?  That’d be a nice surprise when they have to come up with first & last month’s rent plus deposit. 🙂

Do you have any ideas for teaching littles how to be responsible with money?  Share, share, share; I’m sure we could all use that advice.

Love wins,



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