Teaching kids about money

“Mom, can I use my own money to buy Angry Birds Star Wars?”

I froze. It was a simple question, but it threw me into one of those parenting existential crises where you realize that not only do we have to feed and clothe these people who live in our house, but we also have to help them learn things that will help them be productive members of both society and their own homes.

Thus far in our parenting lives, teaching about money has consisted mostly of showing the kids the piggy bank slot whenever they get birthday money or find pennies on the ground.

I wasn’t sure Drew even knew about the plug on that pig’s belly that allowed money to come out to be spent, but our wise (guy) son had figured that what goes in must somehow come out. 

Thriftiness is in my DNA, and despite my math deficiencies I realized early on that I ought not spend more than I made. And I definitely should not run up the 15 credit cards I applied for in college in order to get a free T-shirt. But I knew many, many people who did, and ended up paying for it long after those shirts had holes in the armpits. On the off chance that the thriftiness gene skips a generation, I felt like I needed to take action. I don’t want my kids to be stupid with money.

“How much is it?” I asked.

We sat down together and found the price, then I showed him where he could read the game’s reviews and find out if Angry Birds Star Wars would be a “good buy.” We found out that even if you buy the game, it asks for more money to unlock certain levels. After reading the good, bad, and ugly, Drew elected to use his piggy bank money to buy the game, and he paid his Dad to download the game.

“We need to teach Drew and Kate about money,” I said to Zach later that night. He agreed, so we devised a plan.

Several months ago I read about the concept of setting up three separate banks for your kids to teach them about money. One is labeled “Spend,” one “Save,” and one “Give.” Each bank holds a percentage of money in order to teach the concept that you shouldn’t spend every penny you make on Angry Birds Star Wars.

I bought some Mason jars and stickers to decorate the kids’ elementary bank accounts. Then we sat down and emptied the piggies.

We told Drew the plan.

In the Save jar we would put 60% of his money, while the Save and Spend jars would get 20% each. Any money received from here on out would be broken into these percentages and placed in the jars.

We told him that the spend jar was to be spent on things that he wanted to buy for himself and others (like presents), the save jar was for emergencies, and the give jar was to give to others who are in need or to church.

Then we gave Drew an old check register to keep track of his money. Zach showed him how to record an initial deposit for each account, and a little later he found some change on the floor that he had dropped, so he was able to enter another deposit and balance was recorded. (“I didn’t learn how to do this till high school!” I told Drew.)

Then we sat him down for the big announcement.

“Drew, having a savings account is really important,” Zach told him. “You need to make sure you have some money in savings in case you ever lose your job or have an emergency you need to take care of.”

“When you put your money in a savings account in a bank, they give you what’s called interest. It’s like free money that they give you for letting them use your money.” Free money? Drew’s eyes got big. For a second he looked a little like Alex P. Keaton.

“Since your money isn’t with a bank yet, Mom and I will match what you put in savings. Twice a year, we’ll look at your balance and put in 50% of what you have saved. You’ll keep that money in your savings jar until you need it for something big – like maybe a car when you’re 16.”

Drew looked like the cat who ate the canary. Mom and Dad were going to give him money just for saving money? Ding, ding, ding…I think we have a saver on our hands.

Of course this is just the beginning, as I’m sure there will be plenty of discussions about how the money in the Spend jar ought to be spent. I also told him that the "matching" amount was subject to market fluctuations. But it’s better to learn these lessons when you’re dealing with $6 and not $6,000. I’m hoping this small-scale, fully visual “bank” will help both the kids realize the value of setting money aside for hard times, giving to others who aren’t as fortunate, and spending the money you have left wisely to live a happy, healthy life.

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Insanity the Asylum Vol. 2: Upper Elite

Last week of this program! It has been great...and completely exhausting. Kind of glad it's only four weeks long!