Kids and the concept of money

If you’re a parent, then I’m sure your kids have kindly asked you to buy them something when out shopping. When I say “kindly asked”, I mean more like they drew the attention of everyone in the store to themselves as they threw themselves to the floor and kicked and screamed.

You’re not the only one to experience that. It’s hard to tell them that the toy isn’t in the budget and that you don’t have an endless supply of cash to buy them whatever they want. You can even try telling them that if you buy that shiny new toy that it means you won’t have the money to go to Disney World.

It won’t work. They just don’t understand.

So what are you to do? It’s time to be that awful parent who makes their kids buy stuff with their own money, especially when it’s the type of stuff you expect to find under their bed a week after they take it home.

Our oldest child, 7,  has gotten into making rainbow loom bracelets, rings and more. She even got the idea that she wanted to start selling them.

So when we had a garage sale about a month ago, we set up a stand for her to sell her bracelets. She set the prices (although I had to talk her down from her $10/bracelet), created a display, and made signs. It went so well that she ended up having to bring out more halfway through the sale.

Her younger sister, 4, sold bottles of water. Both of them pulled in over $10 each if I remember correctly.

The real success was that they both learned that to spend money, they have to make money. In order to make it, they have to offer something that other people are willing to pay for.

It’s one thing to tell them they have to buy things with their own money, but if they don’t see the other side of the equation then they’ll just assume that they’ll never be able to buy anything they want. Hopefully, long after the money is gone, hopefully the lessons learned will remain.

How do you teach your kids about money? What ideas have they had to make money? Was the idea yours or theirs? Let me know in the comments below. If you like this post or any others on this site, please subscribe to be notified when new posts go up.

Photo by Carissa GoodNCrazy

Saving for your kids: Now or later?

College

This question came in through the survey I created recently, proof that I’m listening. The question was: Should you save when kids are first-born or postpone until other financial goals met?

Great question. I’m going to start by saying that this is just my take on the question and everyone’s situation is different.

Now that that’s out-of-the-way, let’s dig into this question. My short answer is that you should wait to start saving for your kids until your other financial goals are met, depending on what those goals are:

  • Pay off debt: Wait to start saving
  • Buy a bigger house: Start saving now
  • Saving for a down payment on your first house: Wait
  • Buy a newer car: Start
  • Save up an emergency fund: Wait
  • Save up for vacation: Start

Obviously the sooner you can start saving, the greater your funds will build up over time. However, you have to look at your other financial goals and whether finishing them will set you up to be able to save more later and help your family.

Paying off debt, saving up an emergency fund, and saving for a down payment for your first house are all things that will set you up to win later and removes risk from your family. The others things won’t.

Many of the goals that will cause you to postpone saving for your kids are short-term goals. They are ones that you can concentrate on for a period of time and then put them behind you.

For example, after you’ve saved up an emergency fund you shouldn’t need to ever go back and do that again unless an emergency comes along. However, newer cars and vacations will come around every so often and you need to be able to budget for those while accomplishing other long-term goals (such as retirement or saving for your kids).

What type of financial goals are you trying to tackle? Do you have a question about what order to tackle them in? Leave them in the comments below. If you have something else you’d like to add, leave that below as well. If you’d like to ask a question specific to your situation, use the contact form to send me something directly.

Featured Image courtesy of imagerymajestic / FreeDigitalPhotos.net

Kids = Cash

Couch Kid

Sure, you already know that kids cost money to raise. Too much money sometimes. Have you ever considered turning the tables and raising some cash at your kids’ expense?

Check out the ideas below.

  • Tax Deductions – Kids are definitely a tax deduction and if you’re not taking the deduction already, you’re crazy! It doesn’t even put a dent in what you spend on them in a year.
  • Babysitting – When they’re old enough, you can have them babysit and make some money. They may not give it to you, but at least it’s money in their pocket that they shouldn’t be asking you for.
  • Rent them out – Neighbor’s lawn needs mowed? Friend’s weeds need pulled? Send your kid over and have them do it. Then you can make a back room deal with your friend for them to pay you directly. Just tell your kid they’re doing a service project.
  • Craigslist – If all else fails, sell them on Craigslist. Sure, I could have said Amazon or eBay, but I’m pretty sure they’ve got strict rules against that kind of thing. Craigslist is more of a free for all type of thing anyhow. You might get enough interest before your classified ad is reported. Remember, younger kids have the cuteness factor, but older kids can be put to work. Be sure to stress that in your post.

The most important thing to remember this April 1st is to be creative. Kids have creative ways of sucking our wallets dry, so you might as well be creative in how you fill it back up. Be sure to leave your creative ideas in the comments below.

Featured Image courtesy of Ambro / FreeDigitalPhotos.net

The Allowance Game – Teach your kids about money

Allowance Game

If you have kids, grandkids, or simply know of some kids you kind of like, then I’m sure you can agree that they need to learn that stuff costs money, and money isn’t unlimited. If you can teach them about money through real world experiences, like chores, that’s great. But kids have short attention spans, so sometimes using a game keeps their interest a little better.

I played The Allowance Game when I was younger, which seems like a long time ago now. Now that I’ve got kids of my own, we’ve inherited that same game to play with our kids. I’m going to be basing what I know about the game from the version we have that is from the 80’s (and possibly older). The rules have probably changed with inflation (something I don’t think Monopoly can claim).

The goal of the game is simple. The first to have $10 wins. Every person starts with $2. You roll the dice and move around the board, following the instructions on each space you land on. On some of the spaces you will get money for selling things, doing a job, or losing a tooth. On other spaces, you have to spend money to buy a record at a garage sale (I told you we had the old version), or get some ice cream.

Every time you pass “home” you get to collect your allowance (similar to Monopoly). Unlike Monopoly you don’t buy spaces. However, there are a couple of unique corners. One is the bank, where you can put in a dollar and then every time you land on the space, you earn interest. You can also purchase the skate rental square and then people have to pay you to rent skates when they land on that space. (The skate rental has been updated to a lemonade stand in the new version.)

As for the money aspect, the game has fake 1 and 5 dollar bills, along with plastic nickels, dimes, and quarters. They’re realistic enough that kids will know what they are and can relate them to the real thing.

So what will kids learn by playing this game?

  • How to make change for dollars.
  • How to count money.
  • Buying stuff costs money and money can run out.
  • Saving money can make you money (when you save it in the bank).
  • Starting a business is a good way to make money (such as with skate rental or a lemonade stand).

The Allowance Game isn’t meant to be difficult. You don’t have to read through a huge book of instructions to get started, which is great for kids who just want to get started. You can probably play through a few rounds in an hour too. If you want to teach a child about money, then check it out using the affiliate link below. It could make a great birthday gift!

Have you ever played The Allowance Game? Do you have any games that you play with your kids to teach them life lessons? Leave a comment below!

Dave Ramsey’s Financial Peace University – Week 2

Couples and Money

This last Saturday marked week 2 of the 9 week journey for those going through FPU at our church. I’m at one of the locations that has a pretty small class with about 6 participants each week. Personally, I kind of like this because everyone gets more of a chance to talk and share their story.

Week 2 of Financial Peace University is all about relating to money.  The lesson covers everyone: married, singles, and kids.

For the married folk, it’s obvious that opposites attract. In most relationships there is a saver and spender, and there is a nerd and a free spirit. The nerd is the one who is all excited about doing the budget, and the free spirit is the one who plans on doing their own thing. In our house, I’m definitely the nerd/spender and my wife is more the free spirit/saver. It seems like an odd combination, but it can happen. I like to do all the budgeting stuff, and I think my wife just enjoys the security of knowing that we have a plan and that because of the budget, we’ll be saving money.

For those who are single, doing the stuff in FPU presents a new set of challenges. They don’t have anyone to keep them accountable. So the most important thing for them is to find an accountability partner. They need someone who they will listen to and who isn’t afraid to tell them, “you shouldn’t be buying that” when they need to.

Finally, there are the kids. For the first time in FPU, Dave had his daughter, Rachel Cruze, present this portion of the lesson. There were several takeaways from this section. First, put your kids on commission instead of allowance. You can create a chart with chores they can do and the dollar amount associated with them. Second, when they get a bit older, you can give them a portion of the money that you would otherwise be spending on them. With it, have them open a checking account and then they can buy clothes or pay to go to the movies out of that account. Finally, let them learn some lessons. If they go to the store and don’t have enough money for what they’re looking, tough luck.

If I remember correctly, next week will be all about cash flow planning (which is just a fancy term for budgeting). I hope these updates have been helpful and will hopefully encourage you to investigate taking the course near you.

Featured Image courtesy of Ambro / FreeDigitalPhotos.net

Parenting Moment – Our “Current” Reward System

Kid with Money

I could have called this a parenting tip or parenting advice, but that would mean I know something more about parenting than anyone else reading this. That certainly isn’t the case.

We’ve got two daughters, ages 6 and 4. One day they returned home from shopping with mom and announced that they were each getting a LeapPad. I guess the guy at the store told my wife that they would be extremely discounted in the next few weeks because a new version would be coming out for Christmas. Anyhow, we can’t let something they’re so excited about come without somehow turning it into a learning opportunity.

The reason I called this our “current” reward system is because, like most parents, we’ve probably tried a hundred different ones by now. This one has stuck for more than a few days, so I figured it was worth sharing.

So, we started with a goal in mind: a LeapPad (or Kindle Fire for the 6 years old). We told them that in order for them to be able to get their prize, they had to earn 100 kid dollars. I was able to find some great printable play money at freestuff4kids.net. We started printing out several sheets on 1, 5, and 10 dollar bills. Each kid got an envelope to put their money in as they earned it.

We’ve tried giving the kid’s money for doing different tasks around the house before. It didn’t last long since they didn’t have a specific item in mind to use the money for. Besides, they technically didn’t lose anything if they decided not to do what we asked them to do. They never had the money in the first place, so it was no real loss.

This time, we told them that they have $5 at the beginning of every day. When they choose to fight, take something from their sister, hurt each other, or do something else they know they shouldn’t do, they lose one of those dollars. On top of that, they also lose a dollar if they come downstairs after being put to bed. They’ve went to bed more than once with all $5, only to lose a good portion of them in about 30 minutes.

So far this has worked pretty well. Whenever things start to look like they may be degrading, we simply ask them “do you want to lose a dollar?” In most cases they stop what they were doing since they know that means it will take them that much longer to get that special item they’ve been wanting. Hopefully they’re thinking “is starting this fight worth losing a dollar?”

We have run into one issue with our 6 year old. She had a breakdown one evening on our way home from the babysitter because she didn’t understand how close she was to the $100 goal. She knew how much she had, but she couldn’t visualize what that meant. To solve that problem, I made a simple graph on the outside of their envelopes and we started filling it in whenever they get their dollars from the previous day. (In our setup, they can’t lose dollars that they’ve earned from previous days.) That seems to have helped quite a bit since she can now see how close she is to getting her Kindle.

I’m not going to say that this approach is right for everyone. I’m sure there are a bunch of you out there finding all sorts of flaws with this or have your own systems. If so, feel free to leave something in the comments below.

Featured Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net