Teaching Kids About Money is A Lot Harder Than I Thought

Michael QuanBeliefs, Education, Family, Misc23 Comments

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I’ve recently realized that teaching my kids about money is a lot harder than I once thought.

This post will help me to sort through these thoughts and allow me to remember what I intend on teaching my kids when it comes to money.

It wasn’t that long ago when my kids were super young and I didn’t have to worry at all about money conversations.

Now at ages 6 & 4, they are aware of money, and even credit cards.  Their fiscal innocence is nearing an end!

My Daughter’s Exposure to Money

Teaching Kids About Money

At age 6, my daughter is learning about money from many places (parents, grandparents, cousins, neighbours, & friends).  Up until now, the extent of our money conversations has been playing with their cash register and occasionally letting her swipe my credit card at the market.

She also understands that her grandpa works really hard to “earn money” and it pays for food and other things “needed” in life.

During her birthday and other special celebrations, she collects red gift envelopes filled with cash.  It could be upwards of $100 or so, and I meticulously track it for her college fund.

My Son’s Exposure to Money

As for my son, well he watches sister closely and is learning about money faster than she did at his age.

He sees that his sister wants money, so he does too naturally.

In fact, a couple of months ago, I told my newsletter readers about a time when he stole $40 from Mom’s bedside table!

He went so far as to stash the cash into his own wallet and then played 100% innocent.

What They Don’t Understand

They don’t, however, have a concept of how much things cost.  If my kids only knew how much $100 could buy them (100+ candies, 10,000+ stickers, or any toy he/she could dream of)… well, that would ruin them… haha.

The interesting thing with this generation is that I rarely use cash anywhere.  So, trying to bridge the knowledge gap between coins, cash, and electronic payments will take a little longer than when I grew up in the 80s.

It hasn’t happened yet, but I’m simply waiting for the day when they ask, “Why can’t I buy that if I can afford it?  Isn’t that money mine?”

Also, they know that we “give” money to charity, but they don’t quite get “why” we do it.  I did take the whole family to the rescue mission where they feed the homeless and help get people back on their feet, but that exposure needs to occur regularly.

Finally, they have no concept that we are relatively well off (i.e. upper middle class+) and don’t think twice that both parents are involved with them daily.

Daddy Does What  for Work?

Because I’ve been home with my kids since they were born, it’s easy to forget to explain that “not going to work” isn’t normal.

I only recently told my daughter that I used to run a company, to which she replied, “You did!?”

It was a completely foreign concept to her that I used to “work” in a more traditional sense.

Then, somewhere along the line, she learned from a neighbour that I was a food blogger.

And, that’s become my most recent identity to her.  It’s a bit hard to explain to her that’s simply 1 of a half-dozen other identities I take on these days.  But, for now, I’ll simply leave it alone.

BTW, when should I even start the conversation about FIRE with them?

The Challenge

So here’s the challenge so far.

I don’t think I’ve been teaching my daughter and son enough about money.

They are getting most of their money ideas from other people and media.

I don’t want them to be limited by beliefs like…

  • You have to work your whole life for money
  • You need money to make money
  • You shouldn’t talk about money (my fault so far!)
  • I’m too young to need to know about money

On the other side of the coin, I don’t want them to think…

  • Money comes easy, so I don’t need to work for it
  • We have a lot of money, so it’s no big deal
  • I should be able to buy anything I want
  • Money is the source of my happiness

The Balance

How do we provide the best for our children, without spoiling them or denying them the natural hunger or drive to succeed?

If you’ve read my blog before, you know that I’m a huge proponent of balance.  And I don’t think teaching kids about money is any different.

I guess I’ve just been avoiding it because they were so young, and now all of a sudden they’re little humans running around the house!

So, I guess it’s time to tip the scale back into balance.

Our Goal

I think the goal for our children is to teach them these key lessons about money…

  • Money is an important tool, and you should learn to use it well
  • Money should be saved, invested, and made to work for you
  • Money should be used to supply a family with basic needs first, great memories, and then things
  • Money should be shared with others
  • Money should not be spent frivolously
  • Money should not be hoarded
  • Money does not define you, or anyone else

I’m sure I forgot a few, but part of this post is to remind me in the future.  So, I’ll update this as it evolves.

The Methodology

Teaching kids about money it really boils down to instruction, observation, and learning by doing.

Although I believe we are doing a lot of good things with money in our family, it’s probably not visible to the kids.  So, as they continue to get older and more aware, I need to make it a point to spend more time with them and be patient with questions revolving around money.

Sharing what and WHY we do something will go much further than us telling them what to do.

If I think back to when I was a kid myself, I learned the most from watching my parents and observing those within my extended family.

It’s important to never limit a child’s imagination when it comes to money or career.

Final Thoughts

Well, we have a long way to go with our children before they are fiscally responsible adults.  And, I’m confident they will be fine if we take a balanced approach.

In the end, we all have to make choices and decisions for ourselves, so we’ll also have to “let go” at some point and allow them to fail sometimes.

It’s easiest to fail when you’re little, so perhaps it’s almost time for them to learn about chores and an allowance.

Readers, what are your thoughts when it comes to money and kids?  Do you believe in giving an allowance for chores?  What else should I be aware of as they grow older?

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23 Comments on “Teaching Kids About Money is A Lot Harder Than I Thought”

  1. I’m having a tough time too. I guess we’ll just have to take it slow. For now, I’m just teaching our kid not to spend too fast. It’s better to wait and save first. It’s tough for them because they have money in the piggy bank.

    1. Yeah, it’s interesting with kids nowadays because cash is rarely exchanged anymore. So, it’s harder to emphasize the concept of amounts and change.

  2. Definitely something I’ve been thinking a lot about with my 5 and 2 year old. I’ve been putting it off thinking they’re still young but my 5 year old understands certain concepts. I’ve always wondered whether to give an allowance based on chores. On one side, I want them to learn to earn money but also expect to do chores as a part of their household responsibilities. I’ve also been putting their red envelopes into their 529 plan but considered opening a savings account and maybe index fund so they can learn about saving/investing.

  3. I don’t believe in money for chores because chores are the inherent price of living in a household and I don’t want them to learn that they should only take out the trash or wash the dishes if they’re getting paid for it. There are some things you do because it’s part of the social contract and being able to fend for oneself (like bathing!).

    We’re tackling some of those early concepts here (http://agaishanlife.com/2018/07/how-were-teaching-a-three-year-old-about-money/) and will start to build on it as JB gets older but I know that inevitably, we’re going to lose at least half of the lessons because it’s too abstract right now. My ideal path is to give JB a lot of ways to practice what we’re talking about to cement the lessons. If we do this well, I hope we do, then ze won’t have to make too many of the same expensive mistakes but everyone is different, likely ze will find other ways to make mistakes 😉

    1. I think I agree with you that certain chores are just a part of contributing to the family household. The question becomes, where can I find opportunities for them to do earnable chores.

      And, yes, practice certainly makes perfect (or at least a lot better!). 🙂

  4. My kids are 7 and 9 and for last few years we have been given them monthly money (10 each) and they have a list of things they want to buy. We stopped buying stuff for them unless special occasion but mainly we delegate back to them…

    If they don’t spend money in a quarter we match their savings.

    Most helpful – I never say “no” (well unless something ridiculous) I always say yeah just put it on your list! That has immediately stopped the complaining and they feel it is in their control.

    Also it allows us to comparison shop and they have now bought used stuff as a result to get things sooner – and they allow us to sell used stuff if they get money for it.

    Best now I can show them by delaying how many things actually fall if they list – means they did not actually want it that bad and are now more thoughtful about what they really want.

    We also openly talk about things we adults get and what we may have had to give up to afford it, it helps!

    1. Nice, I like how you match their savings if they don’t spend anything in a quarter!

      Also great that you allow them to put it on their list. I think I need to borrow that instead of shooting down ridiculous trinkets.

      Comparison shopping is a great way to start understanding the value of a dollar and opportunity cost.

  5. Michael,

    I think you hit this on the head. Just like you have done with you working career(s) thus far, you need to be very intentional with your kids about money. I have 4 young kids (under the age of 10) and the biggest thing we have done with them is teach them that money comes from work. More work more money, less work less money. Certainly as adults we know that there are ways to earn more money through working less, but working smart but that concept doesn’t quite resonate with kids yet.

    We don’t give them allowances, but rather they have jobs and get paid by the job. I have also started to show them the benefits of “investing” and how compound interest works with their education funds (I keep them in an UTMA). Super high level and with round numbers.

    As far as work goes, I do work a traditional 9-5 and I am teaching the older ones that this isn’t what Dad wants to do forever. The goal is to spend more time with them so Mom and I have to be very smart about where we spend. The older two and beginning to see that work takes Dad away from home more than they want Dad gone, so I think this point is starting to resonate with them and hopefully I can point them on the right track to “2nd Generation FIRE”.

    1. Kudos to you, Cooper! 4 kids are quite a management feat even before rolling in great money lessons on top of that. It sounds like your kids are going to absorb some of your work ethic naturally. It’s great that you’re teaching them the value of a dollar with jobs early on.

  6. Howdy Michael – Chores for money seems like a no brainer. When is it too early to start? I’d love to have my boy help me water the plants and pull the weeds when he’s 3-4. He can join me in learning how to nurture things to see them grow.

    It is interesting though about us going into a cashless society!


    1. Yeah, I like the idea of chores, Sam. Where I have some reservations is deciding which chores are earnable events, vs. which chores are simply required as a member of the household.

      Your son will learn a ton from your strong work ethic!

  7. Awesome post man!

    I don’t have any children, but as soon as I rid myself of the debts in my name – Birthday and Christmas stocks will be a regular thing for my nieces and nephews, so they can watch it grow and learn how important it is to start early!

    Sounds like your children are in good hands 🙂

  8. Awesome post, Michael! I like that you brought up that your kids don’t understand the concept of how much things cost. I see the same thing with my daughter so I’ve been making it a point to bring up the cost of things more often. We’re also starting to talk about how much money families generally make so she can start to get perspective… tough battle right now!

    I’m with you on the approach to balance. It’s so important that we raise kids to understand the importance of a good work ethic and the value of money. But at the same time, limiting beliefs about money can really hinder the potential they have. The good news is that your kids (and mine and some others) have parents like you and I to point them in the right direction. From there it’s on them to make it happen! 🙂

    — Jim

    1. Yes, Jim… work ethic is super important for us. We definitely don’t want our kids to feel entitled as much of this younger generation does. I think we can give them a solid baseline and cross our fingers. 😉 It’s definitely on them to make it happen!

  9. Great post Michael. My kids are a little younger than yours, but I’m a big believer in exposing them to everything I can about money.

    To a certain extent, I don’t think some of it will stick. A mind has to be mature enough to process some of the money concepts and that takes time, mistakes, and experience with life. My hope is that through exposure when the finally are ready some of the lessons I’ve taught to them over the years suddenly make sense.

    1. I think your strategy is sound, Mr. Tako. If I think back on my own journey, I slowly figuring things out and eventually realized that I had picked up a lot of financial learnings from my parents (good and bad).

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