Raising Financially Responsible Kids: Age-Appropriate Money Lessons

Raising children is hard.  At first, we were just trying to keep them alive.  Then, we’re teaching them basic skills - tying their shoes, brushing their teeth, reading and writing.  If you are counting down the short years before they become adults, we are scrambling to teach them adult skills - following a recipe, driving a car, and managing household chores.  

Through all of those stages, we must also teach them to manage money and build positive habits.  

Delayed gratification

From an early age, when my son asked for a toy, we would add the toy to his ‘wish list.’  We would review and update the wish list prior to his birthday and Christmas.  Inevitably, he had forgotten or no longer wanted many of the toys on his list.  This practice taught him to wait awhile before making a purchase, because he may find that he no longer wants or needs it after the initial impulse.

This lesson is particularly important to show by example.  If you regularly receive packages from online purchases, children will recognize the disconnect between delayed gratification for them and impulse purchases from you.  

Spending within a limit

For Christmas, we gave a Disneyland trip - including airfare, hotel, attraction tickets and meals -  to my son’s three cousins aged eight to eleven.  Each child, including my son, received a fixed amount for their own personal spending - snacks, souvenirs, etc.  I wanted to avoid having four children asking for $6 churros every time we walked by a cart or $40 souvenir every time a ride exited through a gift shop.  They still browsed the gift shops and thought very carefully about their potential purchase.  

On our last day, they wanted cotton candy, but they had already spent most of their money.  So they combined their remaining funds and bought one cotton candy to share.

Proud Mom moment!

Saving

When my son turned thirteen, we opened his own bank account and obtained a debit card.  We specifically chose a bank with a branch near our home.  When he received cash for birthdays or Christmas, he would walk up to the teller window and deposit his cash.  We also practiced using his debit card to make purchases and withdrawing cash through the ATM.

We wanted him to understand the connection between cash and the debit card that he used for purchases, as well as building a habit of saving his money for future needs or wants.

Understanding cost of purchases

My son wanted a subscription to CrunchyRoll as his gift for earning his Karate black belt.  We initially agreed on a three month subscription at $10 per month.  After the initial subscription, we discussed if he still regularly watched CrunchyRoll, whether the subscription price provided good value, and whether we should continue the subscription for another month.  We wanted him to understand the cost of purchases and regularly assess the value that we receive from purchases.

When he started high school, he no longer had time to watch CrunchyRoll.  He agreed to cancel the subscription and maybe restart it in the future.

It was important that he contributed to the discussion on starting, continuing and stopping the subscription, so he is comfortable considering the factors to make the decision and prioritizing our household spending.

Monthly review

Most weekends, my son explores the neighborhood with his friends - playing soccer in the park, finding interesting graffiti art, and often, buying lunch at local restaurants using a mobile payment application.  Every month, I review our household spending against budget and discuss certain categories with him, such as dining out.  We want him to be aware of how much he spends on dining out with friends and understand what would be a reasonable amount to spend.  I’ll ask him why one purchase is higher than normal - he decided to try the slushie drink with his meal or a friend forgot his money so my son paid for his meal.

He is very fiscally responsible, so we don’t feel the need to impose a dollar limit on his spending.  Rather, we allow him the freedom to make decisions and discuss those with him when we review our monthly expenses.

We are teaching him money lessons and building positive habits that are appropriate to his age.  We regularly discuss money in our home, often involving him in decisions to switch streaming services or internet providers or choosing to dine out vs. cook at home.