Last week, I told you about my research into how parents help their kids learn about money in Teaching Money: How Some Families Handle It. These ideas represent the standard approach of allowance or instruction that parents use to expose their children to financial decisions. But in the process of gathering information I discovered these out-of-the-box ideas that offer a completely different method and challenge kids in a new way.
Switch to Using Only Cash
Kids watch us buy a variety of items – from food and gas to tickets and toys. But check and cards make the actual transfer of money so vague. Most of us have experienced kids making comments like: just use your money card or go get some more money out of the bank. If we switch to using cash, out children see tangible payment transferring hands and can more easily understand the idea of no longer having it.
Make Your Paycheck Very Real
I first heard this idea in an interview with Craig Robinson, former Oregon State University basketball coach and brother of Michelle Obama. He talked about his father going to the bank and cashing in his entire pay check. They sat at the table with what looked like a fortune to a kid but then his dad began separating out all of the expenses that needed to be paid from that pile of money. I remembered his story because that was another way to tangibly show responsible use of money.
Encourage Savings With Grants
You can motivate your child to save money, rather than spending it on the next flashy toy that strike their fancy. Offer to match their funds when they hit a certain goal amount. This method works especially well when your child wants something specific that requires a large amount of money.
Give Them A Practice Round
Provide a money crunching experience within a controlled environment by putting your kids in charge of something – a summer week, a picnic, a party – and give them a budget. At first, you will need to guide them on how to plan, prioritize, and bargain shop. They discover first hand that if you spend the entire budget on special soda, you might be stuck hungry at the picnic!
Put Decisions In Their Hands
For older kids you can take the practice experience to another level. One set of parents I talked to set a fairly generous budget for clothes and entertainment then paid their children in the Fall and the Spring. That money was it but they could use it as they wanted. They could buy a few designer jeans and shoes and make-do with a small wardrobe. Or they could bargain shop and have a bigger entertainment budget. The one thing they couldn’t do was ask for more money! Their kids became very shopping savvy and even the one that preferred designer clothes learned how to find them for less.
Fund a Start-Up
One family I know took a very capitalistic route. They gave their kids start-up money to create a business. The kids worked for months buying materials, creating, and then finding ways to sell their product. Because of the unknowns, it’s hard to count on this method as a consistent source of finances. These kids did end up earning money from the original investment but weren’t able to continue the profits. However, they came out with money they had earned themselves and a very real view of how business works.
Whatever your method, the key is to intentionally approach the issue, know your children, and be creative. The whole family will benefit from a healthy view of earning and spending money.