Kids and Money

Kids and money is a topic that has eluded me over the years. It requires a lot of patience to teach children simple life skills regarding money. Not my strong suit to be honest. So lately, I have been trying to make more of an effort.  I feel like my children live a little bit in a bubble.  They think it is just a matter of holding out your hand and the ‘magic pile of dollars’ grants their wish. I want these kids to spend wisely. I preach this on this site and even having a buying decision flowchart to help with decisions (see flowchart).  It’s not their fault, they’re kids and don’t have to work for a living. They get an allowance for chores but other than that, the discussion surrounding money has been a little lacking in my house. All is not lost though, there is plenty of time to start teaching this valuable lesson. I believe some of this is also personality trait as my youngest girl, who is 12 years old, is a bit cheap and hates to spend her own money. My 14 year old is a different person entirely, and spends it the minute she gets it.

An idea

This Christmas I decided to try an experiment to see if I can give them a little perspective. They both wanted an iPhone for Christmas and for $600-$800 per phone, you can equip your kid with these beauties. We are doing ok financially as a family, but only because we watch our dollars closely and resist the urge to constantly buy new stuff. I am ok with splurging once in a while but it has to make sense. New iPhones don’t make sense to me. My oldest has a cheap Samsung Android phone ($40), and my youngest uses an old iPhone 4 I got from a friend for free.  This is more my speed.

Complicating things is the fact that I live in an very affluent area and all the kids in school have new iPhone 7’s. They go to Hawaii on family trips etc…  It makes my kids feel bad that we don’t spend like the majority of the neighborhood. I really want them to understand that stuff only makes you happy briefly and that there are more important things in life. I also want them to understand how much work it took to be able to buy the items they want. So I decided to do something different this year……


The Experiment

I decided to let them get the iPhones they wanted but they had to kick in some dough for the purchase. I told them, I would give $200 per kid for Christmas for the phone of their choice but they needed to come up with the rest on their own. My thinking was that I wanted them to feel the pain of handing over the money. They now had a bunch of money in their hand in the form of a phone, and my hope is they would treat it carefully and realize it took effort on their part.


Signs of Progress

One sign for me it was a good idea was that my youngest daughter immediately put flyers in the neighborhood mailboxes to rake leaves for a fee. She got 2 jobs and $80 in 1 week. I thought this was great. She had to work a little and got some money for her effort. As far as I was concerned, this was mission accomplished for her. My other daughter, is not the same personality and made zero effort to make more money. She is waiting for her holiday cash to come rolling in and has no problem forking it over for something she wants.  Kids and Money, Ugh !  Why is it so hard sometimes?

At first, when I shared my plan with them, they started out wanting the best, an iPhone 7, but slowly came down to an iPhone 6 due to the cost. Then they realized they could get a refurbished iPhone 6 even cheaper. So that is what they settled on. I think the experiment is working because my 12 year old had a small moment of panic when she realized she had to fork over $150 of her own birthday/Christmas/chore money to complete the purchase. My oldest has already paid me out of her Christmas money and seems oblivious to the cost. I suspect it will take her longer to grasp this. Maybe she will drop it and it will need repair or maybe she will lose it and realize there is no more money for a phone. I don’t wish this on her but I do wish for a lesson to be learned.


Kids and money awareness is really important and although I am a little late to the game, I am seeing progress. My youngest already has it, but my older girl needs more work in this area. Hopefully, we can get a life lesson as a result of the experiment and the lightbulb will go off in her head. I will keep the pressure on until I think she gets it.

Some have looked at me funny when I mention what I am doing.  Others have said they think it is cruel to use Christmas as a carrot for the kids but I feel it is important to give them perspective on money.  My goal is not to be cruel, but to have them think about purchases and make the tough choices when it is time to reach into the piggy bank. I started talking more to them about money when we downsized (see Downsizing) so they could see that money is a precious resource that requires hard work and patience to accumulate. My oldest daughter is 14 and I am going to insist she start some type of part time work this coming summer. It could be babysitting, cutting grass or working down at the local store. I need her to develop some type of work ethic.

I would love to hear what you think about my little ‘Kids and Money’ experiment. It is not groundbreaking or a new idea but I do believe it will pay dividends down the road. Thanks for reading!