What did I do?
When my kids were in their early teen years I realized they had little appreciation for money. This was not because they were selfish or undisciplined, it was because I was in a two-income home and we didn’t instill an appreciation for money.
At one point I became alarmed by the amount of money we were giving our kids. Fifty dollars here for a show, one hundred for something else they wanted. We had no financial discipline ourselves, and we weren’t teaching that skill to them.
In my own life I bought anything that tickled my fancy, my husband and I at the time were golfing several rounds each week in the spring, summer, and fall. We went snowboarding often in the winter. I think we spent a couple thousand dollars each month on our entertainment; our kids were also spending close to this amount. Finally, I put my foot down and let everyone know we were in for a change.
The benefits of frugal living
You may wonder what value there is in helping kids to live frugally. This is what I think frugal living does for them-
· Kids learn to differentiate wanting something from needing something.
· You can teach your kids how to negotiate. A critical skill that will help them get paid more as an adult. Whether they are negotiating a raise or negotiating with a client they will be happy to have learned this ability.
· Kids learn about delayed gratification, a skill that they can take with them into adult life. Consider how many tragedies could be avoided if adults had better impulse control.
This is what worked for me
I helped my kids understand how money works by offering them one hundred dollars each month for spending money. Of course, this was a long time ago, my children are women with kids of their own now, so one hundred may not be enough for a modern kid. They could spend their money however they wanted. I bought them a bus pass each month, we didn’t live where they offered public school buses. I bought food so they could make their own lunch each day or they could buy lunch at school, but it had to come out of the one hundred dollars they received each month. I bought them new school clothes at the beginning of the year and in the middle of the school year. If they wanted a new pair of sneakers and their old pair was in good condition, they had to pay for it themselves.
It was hard for them initially, but they learned valuable money skills after a while. Their personalities showed, with my older daughter prioritizing seeing live music shows and my younger daughter saving her money. I’m proud of my kids and I love them very much. They are good citizens who care about the community they live in and they are excellent parents.
Become a model of frugal behavior
Naturally, the best way to teach your children to be good with money is to model the behavior that is important to you. Not everyone has the same approach to money management and we all have our own personal economies that vary greatly.
My spouse and I don’t share our economies, he has a lot more money than I do, and I learned from my first marriage that blending finances adds pressure to a relationship. I prefer to manage my responsibilities and he manages his. I never worry that he’s overspending, or buying frivolous items because A. it’s his money and B. he doesn’t do that, he’s prudent as am I.
First things first-
· Teach your kids how to create a budget, either show them how you do it or show them how you want them to do it (don’t forget though that you are the model they will follow).
· Show them how you create an emergency fund, and show them how you have used it to prevent or resolve an unexpected expense.
· Demonstrate how credit cards work and the true cost of credit cards and other types of debt. Being debt-free is one of the most important factors that will lead to financial success.
· Teach them about shopping smart, buying used cars instead of new ones off the lot, buying groceries instead of takeout, and mending socks instead of buying new socks when there is a hole in the heel.
· Encourage your kids to read. Reading is a form of entertainment that can be had for free with a library card.
It’s worth it
Even if you or your kids struggle with the process, it’s worth the effort because they will retain financial skills that will stick with them. They may not adopt everything you’ve taught them but they will be better off than if you never teach them at all.
If you have excellent investment skills – teach your kids that as well. I’m not great at investing, I wish I were. When I dabbled with the stock market I immediately lost money. Not a lot though because I set up a practice round of investing in companies I thought would do well. None of them did well and I lost a few hundred dollars. Not my life savings. You can offer your kids an opportunity to study the stock market, and invest real money or pretend money so they can get a feel for what that is like. Just remember what Mark Twain said, “Buy land, they aren’t making anymore.”
It’s a gift that will last a lifetime
Of all the gifts you will give your children, being numerate is one of the greatest gifts. They will not value the stuffed animal you gave them to sleep with when they are 25 years old. They won’t care about or remember the umpteen small toys you stepped on in the dark of the night. They can’t use the skill of a skateboard to spare themselves from catastrophic financial loss if they aren’t prepared for an emergency when it happens. And it will happen. None of us can escape emergencies, but those of us who are prepared can weather the storm.
Finally, as always I want to remind you that without health you truly have nothing. Health is a financial concern, teach your kids to eat well, exercise, get a doctor’s help when they need it, wear a seatbelt, floss, and see a dentist regularly.
I would love to see a world where people value relationships, intellect, and creative thinking versus a world that values shopping and keeping up with the Joneses, but I don’t believe that will be something that will happen. But it can happen for a subset of society that is taught what’s important.
If you want to learn more about frugal living, buy my book, “Never Worry About Money Again: Gain Financial Freedom By Becoming Better At Managing The Money You Have”
