What’s the Best Way to Teach Kids About Money? A Q&A with Finance Columnist Ron Lieber
Saving, spending…spoiling?
Ron’s question — a good one! — was how did they do that? (Short answer: mostly by example, though it’s of course more complicated than that and it’s a subject I’ve been thinking about and trying to work out since he asked, so stay tuned for more of my thoughts on the subject).
Our subsequent email conversation led to this Q and A, which I share with you now. I signed up for updates from his site, and suggest you go take a look and keep an eye out for his book.
Here’s my conversation with Ron:
You asked me, based on that Daily Worth post about my sons and my allowance stance, how my parents taught me about money without actually giving me any, which is an excellent question (and thanks for asking!). What struck you about that, what prompted you to ask? I mean to say, was it your thought that allowance is the only way, or the most efficient or best way, to teach kids about money?
I think of money as a teaching tool, not as a reward for chores per se. And it’s a good one, one of the best we have for teaching values like generosity, patience, modesty and prudence. So I was a little surprised that you never actually got your hands on all that much. I don’t think allowance is the only way to teach kids about money, but it’s one of the best and it works well early on in childhood (starting at age 5 or 6 or so), whereas other tools usually work better later.
What do you see as the best way to teach kids about money? Do you think that avoiding teaching them at all may be what makes them spoiled — or at least, entitled? Do you think many modern parents skip this step?what with money right now, and why? Tell your kids. Explain your spending. Draw them into age-appropriate conversations. Let them make some spending decisions as early as possible. Juice at the coffee shop, or take the $2 and get to keep it for later? Pretty soon you’ll start seeing opportunities to talk about it a lot. And there’s nothing shameful about that. If you talk about it in the right way, money doesn’t subvert values; it can let you teach the kind of values that are most important to you and your family.
Your book is about spoiling — and as an aside I love that you’re trying to tease apart the relationship between spoiling and money, because I think we agree that one doesn’t always lead to the other, right? Tell me your thoughts on that.
There are all sorts of perfectly lovely children whose families have big piles of money. And there are plenty of spoiled brats living in housing projects. It doesn’t cost very much to spoil a child, because what we’re really talking about here is entitlement. That’s an attitude, not a condition that follows naturally from affluence. That said, it does follow from certain kinds of parenting. Kids aren’t born spoiled, they’re made spoiled, and they’re made spoiled by their parents for the most part. (Though let’s not discount grandparents, who can be a real menace on this front!)
How did you come up with the idea for the book — did it arise out of your column in the Times? Personal experience?
I had written a bit about kids and money in The Times, and people had noticed, even though I didn’t realize the columns had added up to anything. When all of the discussions about inequality began in earnest in 2011, some parents asked me to come speak to their school communities about the topic and how to answer their kids’ questions about money. I came up with the “Opposite of Spoiled” concept in those discussions, and it was those parents that encouraged me to go write a book. I literally stumbled into this, and like most of my favorite columns, this topic came straight from readers, not from my own head.
What message do you hope to get across?
Everyone wants to raise grounded, decent children who will make good financial decisions no matter how much they have or make. Money is one of the best tools we have for teaching values and valuable character traits. And it starts with parents. It mostly ends there too, since schools rarely teach much about money, or much of value at least.
Do you think the prospect of “unspoiling” (or not spoiling to begin with) is different now than it was when you were a kid?
Absolutely. There’s just so much more stuff and it doesn’t cost quite as much to get the good stuff as it used to, so there are a lot more questions about how much a kid should have or get and when. Many parents actively try to find ways to deprogram their kids, with varying degrees of success. It could be by deliberately downgrading family vacations or forcing the kids out of their comfort zones class-wise through activities at home.
As you research your book, what are some themes or ideas or parenting practices you’re running across that are surprising or baffling to you?
The list is endless, since I’m not done reporting yet. How to answer questions from kids about why certain friends have more than they do, since talking about other peoples’ families and the choices they’ve made is fraught with the possibility of implicit or explicit criticism? Kids can take that and run with it in all sorts of directions. Gender is another big one, vis a vis whether you should parent differently around these issues with boys vs. girls. And then there is the question of when or where to draw the line on stuff they want that you can afford but don’t want them to have or buy with money they’ve earned. And when to impose a sort of forced deprivation. Reader comments welcome, please!
You heard him! Ask questions. Let’s all think about and talk about the subject of kids, money, and spoiling.
July 15, 2013 @ 2:00 pm
Very interesting. Like Mr. Lieber, though, I am a huge proponent of an allowance system for children – to teach them about the value of money as well as about financial “freedom.” I have instituted a program with both of my girls, starting when they were 6 as a derivative of their ages. At 6, my girls received a $6.66 allowance – 10% of which went to charity (haven’t gotten into rounding yet) and 1/3 of the balance to each spending, long term savings and short term savings. The amount goes up each year on their birthdays. A bank account was opened for each so that they could make deposits (with their own bank cards.) My six year old is still very early on the learning phase of this but my 9 year old is adept at this point. (By the way, when we go on vacation or do something special, she says to me, “Don’t give me my allowance this week as I know this trip (or similar) was expensive.” Clearly, the value of money is indeed becoming ingrained.) They choose their own charities and their own spending “pursuits.” Dialog is open about money and finances in general, but I think we do indeed have to make this age appropriate so that it doesn’t become something on which any of us “harp.” My girls have chores around the house but their allowance is not a contingency. They’re expected to participate and they really do. I realize, by the way, that I’m very fortunate! Also, I received an allowance as a child – 25 whole cents and I don’t remember it ever going up (but it must have.) I started working – babysitting – when I was an early teen and have always had multiple jobs (even as a professional – I’d maintain part time work too.) My parents were children of the Depression and taught my sisters and me financial/fiscal responsibility by their actions and perhaps to a lesser extent through the allowance system.
July 15, 2013 @ 8:03 pm
I, too, am a big proponent of allowance. We do not tie the money to chores–they must do those simply because they are a member of the family. I was just sick and tired of opening my wallet for birthday gifts, lunch in the cafeteria, spending, etc, that we decided on an allowance that took everything into account so I NEVER open my wallet to them now! We like the monthly system because they need to learn to budget better, especially with only 2x a week allowed for the cafeteria. But they also have the opportunity to bank that cafeteria money and make their own school lunch. I think they’ve learned a lot about managing money from it. (I have one son who keeps a little notebook, notating how much he spends and where so he always has an idea of his spending habits.)