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Drive the Money Point Home

It looks like the topic of money and kids is one that's going to take on more importance over time, particularly as financial institutions get in on the get-out-of-debt act. In The Post's Sunday Business section this week, Margaret Webb Pressler writes about a pilot program called Finance Park that is designed to teach kids to be money smart. In the program, kids are given life scenarios. The kids need to then budget their money given the income they now "earn."

Programs such as this are slowly making their way into schools.

Said Jack Dale, superintendent of Fairfax County Public Schools, which is implementing a financial literacy program to middle schools:

"Our school board, this past spring, was wrestling with the very issue of what should we expect of all our kids when they graduate. At 40 or 50 different public hearings, they repeatedly heard, 'we need to ensure that our kids have financial literacy and citizenship skills.' "

How right Dale is. So, though we've touched on this topic before, (Give Me Money!) it's worth taking a second look.

Some tips from Pressler:

* Watch for and take advantage of teachable moments.

* Consider tying allowances to chores so they don't think they get money for doing nothing.

* Let kids make mistakes early on with money. Better to lose a little now than to learn when you're in college in major debt.

* Teach kids about compound interest.

Looking for more advice? Try reading The Color of Money book club selection this month: "Money Savvy Kids @ Home" by Susan Beacham. This is just a part of Michelle Singletary's advice for the month. Elsewhere in the column she recommends buying piggy banks that allow you to sort money for spending, saving and charity. Maybe it's the crafts person in me, but that seems wasteful. Just have your children decorate a few empty cans (oatmeal or coffee cans will do), cut slits in the top, and -- voila! -- a bank without the cost.

What teachable moments have you had with your kids? Have your monetary habits rubbed off on them? Are they more or less aware of the value of money than you?

By Stacey Garfinkle |  April 16, 2007; 7:10 AM ET  | Category:  Elementary Schoolers , Teens , Tweens
Previous: Your Parenting Style? | Next: Talk to Your Kids About Shootings


If you give your kids an allowance, chores or not, the only lesson they learn is that money comes from Mommy and Daddy.

But if you have the time and energy to be the family accountant and think that you are teaching your 10 year old to be financially responsible, perhaps the idea has merit.

A good idea for teaching your teenager about the value of money is to give them a cell phone. When they rack up about $40 in overtime charges, take the cell phone away until they cough up the cash. It's a mean trick, but very effective. And watch out, I've heard of girls ringing up (heh, heh) hundreds of dollars in overtime charges.

Posted by: Father of 4 | April 16, 2007 8:01 AM | Report abuse

The greatest financial lesson parents can teach their kids is to be a good EXAMPLE!!

Don't teach your kids that a lot of stuff
will make them happy.

Don't give in to the epidemic of consumerism.

Encourage free or low cost forms of entertainment - the public library, parks, the zoo, etc.

Don't give in to the epidemic of consumerism.

Try using cash in front of your kids instead of plastic.

Teach conservation of gasoline and other resources.

Posted by: Jake | April 16, 2007 8:15 AM | Report abuse

tying allowance to chores? I am not sure on this one. I try telling my kids that we live in a family unit and part of that means that we help out. I don't want my kids to expect that everything that they do results in monetary remuneration. Many activities (like being a parent) go un-rewarded financially, but are rewarding in other ways. For example, yesterday, I told the kids that if they helped to unload and load the dishwasher, we could all go play scrabble. they were receptive to that.

Posted by: lifelong | April 16, 2007 8:59 AM | Report abuse

"When they rack up about $40 in overtime charges, take the cell phone away until they cough up the cash."

Um, why wait until $40? Seriously, if they start overusing, start talking to them right away. If they don't stop, they lose the phone long before $40

Posted by: Father of 2 | April 16, 2007 9:21 AM | Report abuse

We don't tie allowance to chores. We tell them that chores come with being a part of the family; since their dad & I do chores to help keep the house running, so can they.

One of our neighbors tied his daughter's allowance to chores and as a result, she hasn't gotten an allowance because she doesn't do her chores. So what has she learned by that?

We've been surprised about how willing our kids are to save for something they really want. I've been less surprised that my younger child is more impulsive about his spending but I expect that to change as he gets older since I see signs that he's beginning to catch on.

Posted by: cab91 | April 16, 2007 9:27 AM | Report abuse

"When they rack up about $40 in overtime charges, take the cell phone away until they cough up the cash."

How about not giving them the cell phone in the first place??

What a bunch of wusses?

Posted by: Anonymous | April 16, 2007 9:30 AM | Report abuse

The most responsible, hard-working and well-adjusted young adults that I know are those whose parents had to struggle. Because money was tight, the children learned to do without, and to work for what they want. If a parent can demonstrate this - the value of hard work and the value of money - then money management is easy.

Posted by: jj | April 16, 2007 9:33 AM | Report abuse

so, Stacey - how are you teaching your two perfect children how to manage money? I'm sure you have the perfect strategy (you usually do...).

Posted by: tired of stacey | April 16, 2007 9:36 AM | Report abuse

My sister teaches first grade in FCPS and is always amazed at the number of her students who have never TOUCHED money when they start learning about coins. There are routinely two to five children in a class of 22-24 who have not touched coins, and often more who have not seen bills.

Part of teaching kids financial responsibility starts with exposing them to and talking about money as young as two or three.

Posted by: Jill | April 16, 2007 10:27 AM | Report abuse

When I was growing up, I was given an allowance. It wasn't tied specifically to chores I had to do. The allowance was given each pay period (every two weeks). I got $20 per pay period. That was all the money I got and I knew that I could not ask for any extra cash once that was depleted. I had to make this money last. It was my lunch money, my fun money, my whatever money.

Clothes were bought separately by my mom - once at the beginning of the school year and some more for Christmas presents.

There were never battles in my house when I was a teenager over money. I didn't whine or ask for things we couldn't afford. I had my $40 a month to do with what I pleased. If I wanted something big, I had to save for it. If I wanted to blow it on junk, I could. Sometimes, I bought stupid stuff and regretted it when I wanted something better later. Lesson learned. My parents never gave me more to make up for it. They said, wait until next pay period to get your money, just like we do. I learned that bringing my lunch to school saved me money (and was much healthier).

To this day, I still live within my means. I buy what I can afford. I save for the big things. I try not to waste my money on stupid stuff. And, I still bring my lunch to work!

I am so thankful for the system my parents set up.

Posted by: Elizabeth | April 16, 2007 10:29 AM | Report abuse

"so, Stacey - how are you teaching your two perfect children how to manage money? I'm sure you have the perfect strategy (you usually do...)."

For starters, Stacey pays her kid not to suck his thumb!!!!

Posted by: Anonymous | April 16, 2007 10:33 AM | Report abuse

We've settled on an allowance system that works pretty well for us [kids 11/9/6]. The kids do have some specific chores that they have responsibility for -- things like emptying the dishwasher and loading the woodpile in the winter. They also have other periodic tasks that we pay separately for [shoe shines are $1/pair].

They earn $10/week each -- but they are required at the end of every month to put $20 in their bank savings account. They have the flexibility on how they save that $20 -- but they have to save it.

Our two oldest saved up over the course of a full year to each buy iPods -- wife and I were very impressed.

Posted by: Anonymous | April 16, 2007 10:35 AM | Report abuse

My friend is a high school math teacher and she says most of her kids don't have a clue how credit works. Regular talks about credit (it's not your money you're spending) and being transparent (or at least translucent) about the family budget seems like a good thing. My dad used to show me his excel sheets of bills and taxes when I was a kid. While it was boring (I mean really, it is) I was familiar with it for later. My mom made me learn how to do math in my head by having to calculate the price/weight to find the cheapest brand in the grocery store (which they now do for you). I also had to fill out the checks and enter them in the ledger. It wasn't really ever a game or a learning situation, it was just part of my duties in the house that taught me how they managed their money.

Posted by: Em | April 16, 2007 10:39 AM | Report abuse

My parents set up mandatory chores for each of us that were not tied to allowance, but then there were also some optional chores for which we could make money. If we wanted money, we'd sign up to mow the lawn or wash the windows or whatever.

As we got older, I was paid $5 per week to do all the family's dishes and cook dinner on Fridays. From that $5 per week I was expected to buy all my own clothes. Since this was in the early 90s, $5 per week did not go very far for a teenager's clothing budget! I quickly learned to shop at the Salvation Army, do my own mending, beg my brothers for anything they'd outgrown, etc. When I discovered one of my friends got $20 per week for the same thing, and others didn't have to buy their own clothes at all, I was shocked--but this opened the door for my parents to explain to me that we were poor and this was what we could afford to do.

This was a fantastic lesson on how to make do. It made me realize when I went to college that unlike some of my peers, I would have the freedom to choose a career based on my ideals, even if it wouldn't make me any money, because I knew how to live on very little. Also, if financial setbacks came my way, I'd be able to weather them easily.

Those of you who aren't poor, I hope you never have to be--it isn't easy. But I hope you consider teaching your kids how to make do. It's wonderful to know that you can make it, no matter what happens, and that sometimes it's worthwhile to choose to do something you love over something that pays well.

Posted by: worker bee | April 16, 2007 10:54 AM | Report abuse

On this board is the first time I've heard of NOT tying allowance to chores - although I haven't ever done research on it before, so no wonder, right? As a child, my allowance was tied to chores, so that is how I started my kids.

They know that they are old enough now to have chosres to do, and that they have to do them. They haven't complained yet about having chores. And I recently added on to the chores, and added a few cents to the allowance. I guess since they can't get real jobs, these chores are their jobs.

They haven't tried to blow off allowance just to get out of doing chores- yet.

But, we do make them use their allowance - if they want something, they need to save up for it.

As an example, there was a school dance, $1 at the door, and extras for glow sticks and snacks. I thought that having them use their allowance would be a good example to show them how much it costs to go out and it also eliminated the 'can I have' questions.

Posted by: prairie dog | April 16, 2007 11:14 AM | Report abuse

Em and worker bee, are you my sister? We grew up with the same approach and I am just as grateful. We each saved a full year's, pre-tax salary in the first 2-1/2 years of working, each of us reaching our savings goal six-months ahead of schedule. And we would each attribute that to many of the lessons you discussed.

So glad that their are so many kids who "turned out" moneywise posting. I think money might be the area where the longitudinal perspective, i.e. knowledge of how lessons translated to adult life, is most critical to a parent developing their teaching model.

Posted by: Jill | April 16, 2007 11:16 AM | Report abuse

prairie dog - if this is the first time you heard about not tying basic chores to allowance you haven't been reading any parenting magazines for the last dozen or so years (it might be longer than that but that was before I started reading them).

As for the people who say they won't blow off the chores because then they won't want to lose their allowance how are you going to deal with an older child who says - Hey why should I spend my time doing x chore for y allowance when I could work extra at the fast food place and earn even more? The point of chores is that the child is part of the family, and when they are on their own they will know how to take care of a home. The point of an allowance is to allow the child to practice money management skills. A plus is the allowance can also stop the begging for cash from the parents for certain things.

Posted by: Anonymous | April 16, 2007 11:25 AM | Report abuse

Your're right - I haven't been reading the parenting magazines. Only in the dr's office once a year! But, frmo hearing about it now, it's an interesting argument against using allowance that way.

I also mentioned that as a child, my allowance was tied to chores, and from what I recall, the transition was pretty seamless from me getting an allowance to my getting a job. But, I still had to help with the household stuff - I did laundry, vacuumed, cleaned bathrooms, started dinner - the works. I'm not sure how my mom did it, but it never occured to me that I could blow off chores once I got a job.

Posted by: prairie dog | April 16, 2007 11:45 AM | Report abuse

The point of not tying allowance to chores is that you should not be paying your children to do things that they should be doing as members of the family. Just like parents don't get paid to do the dishes or the laundry, children shouldn't either. We do them because that is a part of working together as a family to keep the house clean and functional for all to live in and enjoy together. Everyone does their share, no one is paid for any of it. You do your part, because you are a part of the family.

The allowance is a separate tool used to teach money management and budgeting. It is used to keep kids for asking for money and stuff 50 times a day or week. They get what they get and have to make do with that. No negotiations, no whining.

Posted by: Elizabeth | April 16, 2007 12:17 PM | Report abuse

When my friend's daughter was an older teenager (16-ish), she had her daughter take on the task of always entering all the info into their Quicken program. Without lectures about "money doesn't grow on trees," her daughter soon appreciated how much her piano lessons, school tuition, school dance dress, etc. cost relative to her family's income. In the process, she learned about credit card payments, insurance premiums, child support, and a host of other adult expenses that young people are pretty clueless about. I remember being a little shocked that my friend would reveal such information to her daughter, but her daughter was smart and mature, and it was a great show of confidence in her daughter's maturity and discretion to put it all out there like that.

Posted by: Anonymous | April 16, 2007 1:07 PM | Report abuse

One of the 'tips' mentioned: Consider tying allowances to chores so they don't think they get money for doing nothing.

I agree with that. I can't see giving an allowance just for the sole purpose of money management. In my mind, they need to earn it somehow, and since they can't get a job, they can 'work' at home.

I see everyone's point about being part of a family and doing your share. But, I think you can combine both points of view.

My kids know they are helping the family, and that they can't 'opt out' of chores. They are still young and still do the happy dance when they find a dime in the couch, but I suspect, if (when) I get the 'why should I do that chore for this amount' argument, that is the point I would bring up.

And I think the end result - saving up, managing money, knowing where your dollars go - is the same overall lesson.

Posted by: prairie dog | April 16, 2007 1:22 PM | Report abuse

How do kids learn to eat? First they cry, you feed them and it's done. Nothing more necessary.

Then, their motor skills and mouth develops so they can get mushy bites. They get to WATCH the parent get the food out and prepare it. They begin to recognize what food goes with what reaction- happy or yucky.

Then, they can take solids and hold their own food in their hands. They can go beyond just crying when hungry and desiring food.

Then, you actively teach them to use tools- you give them the utensils, you make them watch you using them, you let them try and practice.

By the time they are five, they can order from the menu, put on the condiments, eat and be perfectly independent (with parental final authorization of course).

Not that finances are as simplistic as all this, but it's the same PROCESS. You start small and slow, you wait for their cognitive and motor skills to catch up and then you go a little further. You're teaching them to become someone who is completely independent of you and able to make good choices for themselves. This should ALWAYS be the ultimate goal in mind and the background motive for everything we teach kids.

Some kids do great with the "exchange of services for money" deal, some kids completely take advantage of it. Some kids need to work their own jobs, some kids don't care. It's more important that they act responsible and end up fulfilled- not any particular method.

Posted by: Liz D | April 16, 2007 2:19 PM | Report abuse

At what age can I start this. Is 6 - 7 too young to start? He already has the "I'm entitled" attitude, and I really want to break it. Money means nothing to him. He certainly won't work for least not for now..

Posted by: May151994 | April 16, 2007 2:22 PM | Report abuse

To May:

I would say first figure out where the entitlement attitude comes from and work on that source.

Secondly, practice saying no in a polite and positive way. And cut back on the extras- SERIOUSLY. No new clothes unless he outgrows them, no going out to eat unless he does something truly exceptional. Basically, break it down to the bare essentials and follow up on a system of rewards.

It will take a lot of discipline from all his guardians to keep track of this and learn how to say no politely, regularly, and stick to it.

And a 6 year old is certainly old enough to be able to pull his comforter straight over his bed, get dressed with the clothes you laid out, eat properly, put dishes on the counter/sick, pick up trash every night and put it in the trashcan.

You're still pretty controlled over the environment here, he won't GET anything unless you allow him to have it, and given a few months of discipline, it will hopefully get his mindset to know he has to earn things and show the right attitude in order to get to do the fun stuff and have rewards.

Posted by: Liz D | April 16, 2007 3:42 PM | Report abuse

for the kid with the entitlement mentality... a book i really liked that might help - don't give me that attitude, 24 rude, obnoxious behaviors that kids have & how to change them.
the other thing to look at (& i don't mean this as harsh as it is going to sound) look at your own language & attitude. when you buy yourself or somebody else something what do you say? do you tell yourself no? i think that is the hardest thing for me to do. i'm not particularily materialistic so i don't have a lot of stuff but what that really means is when i see something i want i buy it. i don't want my son picking up the idea that he can get whatever he wants so i try to talk to him about making choices & planning purchases. i also try to talk about my values - 32 pairs of shoes? not interested. 32 different types of tea? now, that's important! (that's a joke but you get the idea). talk about why you'll buy 1 thing, say books, but not another, like a toy.
i swear that i think some of that mentality is genetic. i have 2 stepchildren; one has that mentality & the other doesn't. same parents & parenting.

Posted by: quark | April 16, 2007 4:58 PM | Report abuse

The stupidest suggestion is to not teach them about credit cards and how to use them. The reason people have trouble with plastic and debt is becasue of that.

Credit cards are a great tool and cash is going away anyway - teach your kids to understand what credit is, how unseen money is still money and to spend responsibility and maximize returns through selective use of leverage and they will be better off than if you teach them to hide cash in a piggy bank.

Posted by: aa | April 16, 2007 5:54 PM | Report abuse

My older daughter began getting an allowance when she began first grade. She gets $1 a week. She began doing more chores at that time as well, but the allowance is not payment for the chores it is just because I want her to have spending money. The chores are because we are a family and the family needs to share the work. My younger daughter is now nearly six and she desparately needs an allowance. She has some money of her own, but it has only recently that she has discovered the value of money and tries to keep track of it. She'll begin getting an allowance this summer when she turns six.

Neither daughter has never had an entitlement attitude, but I would think that an allowance would help with one. When either of my girls want something, I usually ask her if she has brought her money. I make sure they bring their money on trips, so they doesn't bug me for junk at gift shops. They have learned to make choices within their budget, to deal with disappointment when they can't have everything they want, and they experience the (sometimes fleeting) joy of having something that I wouldn't have purchased for them. I generally won't let them buy sweets with their money (they get enough sweets from other people), but pretty much anything else is fair game, if they can afford it.

Posted by: when to start | April 16, 2007 7:49 PM | Report abuse

This reminds me of a few weeks ago at my school. We don't have a cafeteria, so we take the kids next door to Burger King (I know, healthy, right?). The younger kids usually tell us what they want, and then we give the receipts to their parents to reimburse. The older kids (4-6 graders), bring their own money and order their own food.

A few weeks ago, a kindergartener was sitting proudly at his table showing everyone some coins he had. He explained to me that it was his first "money", his mommy had given him a $5 bill, he had given it to the lady, she had given him a kids meal AND coins!!

This was so cute, I nearly peed.

Right up until a few hours later, back in class, he tried to give me a dollar if I didn't make him finish his schoolwork.

Posted by: Kat | April 17, 2007 4:21 PM | Report abuse

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