Suze Orman would be Proud: Kids, Money, and Family Peace

Suze Orman would be proud: Kids, Money, and Family Peace.

Teaching Kids about Money: Tip Number 1 – Decide what categories of things you think your kids should have to make a purchasing decision about, give them an annual budget, and help them plan. Best thing I ever did as a parent. Here’s why.

I remember dreading going to the store when my kids were young—I don’t mean infants or toddlers, they were easy then, they didn’t know how to beg me to buy them the cool foods or the nifty toys they spotted at the check-out stand. They didn’t know how to negotiate, and negotiate, and negotiate again. They also hadn’t been mesmerized by the toy companies that relentlessly targeted kids in their TV commercials.

So, the kids learned to want. To want this or that cool action figure. Or that awesome new truck. Or that lovely new video-game. Or, just about anything they set their eyes on.

It wasn’t that my kids wanted any more—or any less—than other American kids (or adults). But, the shopping excursions exhausted me. Come to think of it, the pre-shopping build up exhausted me, too. “When are we going to the store again? “ “When we go to the store next, can I get the new [fill in the blank awesome toy that all my friends have]?”

I hated sounding like a broken record. “No.” “Please don’t ask.” “Sorry, I don’t have the money for that right now.” “You’ll have to wait for a birthday and see if you still want it.” “We’ll see.”

Aside from these shopping related interactions with my kids, life was good. So, I decided we needed to find a way to fix the problem. The problem: the kids and I were in a struggle over what the boundaries were with money. And, it wasn’t appropriate or practical to sit down and have a heart to heart about the value of money, how much we had to spend, what it means to want v. need. Let’s face it, it would be nice, but that is just not the reality with kids.

So, my husband and I wrote down all those things that we provided to the kids that were important to the kids and us, but that were essentially “wants” not “needs.” The list included: clothes, other than school clothes and the basics like coats, shoes, undies, and socks; summer camp tuition; movies and other activities with friends; dining out; books; toys; gifts for friends and family; and, a few others (depending on the age and gender of the child).

Next we added up what we spent annually on these things and then sharpened our pencils – what should we be spending on these things?

Once we calculated the annual dollar amount, we figured out how that money was spread out over the year. What were monthly expenses or allowances and what were larger annual expenses—like camp tuition. We did this because we wanted to give them a “lump sum” in their bank accounts to cover expected expenses that they would not have time to save for this first year. As I recall, we started the program in January, but tuition for camp was due in February, and we had already planned for the kids to attend camp. So, we started them with the camp tuition in January. The next year, of course, they had to save for camp tuition and other large expenses.

So, we gave the kids an annual dollar amount, gave them a “lump sum” (about 3 months worth) up front, and then gave them a monthly “allowance.”

The next--and final-- step was talking to the kids – explaining the plan, why we had it, and laying out the rules. Kids like rules – bright line rules provide a sense of security. And, for my kids, it made them happier. We sat down with the kids explained the plan. They were excited. And, they liked the rules:

They were responsible for certain types of purchases and activities. We gave them the list.

We told them that they could not ask us to purchase for them any of the items on the list.

We gave them a list of what certain things cost – like movies, camp, shoes, ski lift tickets.

We told them that when they ran out of money they could not ask for more.

We helped them figure out how much they would have to save every month to buy certain items or to have enough set aside for camp or other large expenses.

We told them that we were not going out to dinner unless everyone in the family wanted to pay for their own. Or, if a child wanted to take the family out to dinner with his or her money, that was fine.

We told them that we would always shop at the grocery store from a list. They could not ask us to buy foods at the store that were not on the list. But, they could buy the items themselves—if that was what they wanted to spend their money on.

The result: no more conflict over money. Period. Shopping was relaxing. We had no pre-shopping build up.

The kids often asked us to help them figure out what they could afford to buy – and when they bought things, they learned to shop for bargains. This also opened the door for us to talk about saving for big purchases or giving to a charity or church, which both of the kids chose to do. I remember when my son wanted a new pair of swim trunks – which we didn’t think he needed. So, he went shopping. He found a few pairs he liked and ultimately bought the pair that was on sale for 40% off. He was so proud of himself and his purchase.

The money plan was rewarding for us all and gave us all much more peace and certainty around money issues!

I’ve shared this idea with several friends – one told me I saved her life. A bit of an overstatement, to say the least; but, I smiled when she told me, because I remember the sense of peace this plan gave our family. Suze Orman would be proud!