Money Skills for Kids

Money Skills for Kids

Finances are a challenging issue for many people, myself included. My relationship with money hasn’t always been a good one; if I were to be completely honest I would still categorize it under a “work in progress.” If you believe in multiple lifetimes, abundance is definitely my “thing” this time around.

There are so many issues around money for people, be they emotional, psychological, or spiritual. In addition we don’t live in a culture that really fosters fiscal responsibility, with banks handing out credit cards at universities (without the necessary credit counselling to go with them) and banks that will give you enough rope to hang yourself with when they offer ongoing credit increases. Not to mention wooden play sets for kids that include credit cards as a form of payment. We are not educated on money management in school; it is the responsibility of parents to pass down these skills to their children. Some do, but I would say the vast majority of people have their own issues around money and spending, and unfortunately some of these issues can get passed down for generations.

A couple of years ago I picked up a book called Debt Free Forever, by Gail Vaz-Oxlade. The title intrigued me, was such a thing even possible? For those of you who are not familiar with the book, she uses a jar system and purchasing in cash to keep track of finances and learn accountability and discipline – when the money is gone, it’s gone. There is no relying on a credit card to magically correct your overspending. She combines this with the painful process of looking closely at personal expenditures to see where exactly your money is going, and getting on track to eliminate any accumulated debt as quickly as possible.

I read through and implemented the tools in the book and it was a complete game changer. I implemented a budget for (I am embarrassed to admit) the first time ever. I was finally able to see where my money was going, and to appreciate that five dollars here and two dollars there were contributing to my being inexplicably short by the end of the month. Have I stuck to it 100%? Sadly, no. Some people are emotional eaters, I am an emotional spender. This is why I described myself as a work in progress above. But I can proudly say that I have made huge progress over the past few years. This process has also made me keenly aware of the skills I want to pass along to my kids, to ensure their relationship with money and spending is a healthy one.

and Kids

A year ago I was walking through Chapters and noticed that had come out with another book for kids, entitled Money Smart Kids: Teach Your Children Financial Confidence and Control. I was pretty thrilled to see it, and curious as to how her financial advice would relate to kids. I read through the book and a couple of months ago we put her tools into action. She suggests giving your children the same about of money as their age per week, and dividing that money into four categories. My daughter is 7, so she gets $7.00 per week. Out of this total amount, 5%, or $0.35 goes into sharing (charitable donation), 10%, or $0.70 goes into long term savings, and the remainder is divided between short term savings and “mad money”, aka spending money. My daughter is up for a costume, so she decided to put $5.00 into her short term savings, and the remaining $0.95 into her “mad money”. Her sister, who is a year younger has followed suit, along with my 3 year old son. We kept the kids’ piggy banks for their short term savings, and made up jars for their mad money, long term savings and sharing.

We have taken this opportunity to explain the importance of charitable donations, and will allow them to choose what they want to put the money towards when we do our annual donations close to Christmas. $0.30 a week doesn’t sound like much, but it adds up over time, and gives the kids a tangible perspective on how money can increase if you don’t touch it. We have set the goal of opening a bank account for the kids once they reach $20.00 with their long term savings, which will allow them to earn interest on the money they deposit. The girls have been tempted to dip into their short term savings on occasion, which allows us to have a discussion with them about picking and choosing, and thinking about what they want more out of the two options in front of them. They can choose between instant gratification and a longer wait for what they want, or a bit of patience and the ability to purchase an expensive item more quickly.

Through the process of implementing the jar system with my kids I have also rekindled my own sense of financial accountability. When I hear words come out of my mouth around making spending choices rather than impulsively buying that thing that looks so good at the time it allows me to wake up and be more conscious about my own expenditures. It really is true, that in the process of helping others you are truly helping yourself. It is such a gift to be able to learn these lessons through coaching my kids in their relationship with money, and to know that I am setting them up with good life skills in the process.

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