Teaching Money Management Skills… Without Using Money

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spoiled160In the book The Opposite of Spoiled by Ron Lieber, there are a number of tips and tricks presented to help teach your kids to be good with money:

The foundation of the book is a detailed blueprint for the most successful ways to handle the basics: the tooth fairy, allowance, chores, charity, saving, birthdays, holidays, cell phones, checking accounts, clothing, cars, part-time jobs, and college.

As I read through them, most of them were never found in my own childhood. I was never given a wad of money to buy my own school clothes. I didn’t have a fancy save/spend/give jar system. I had chores, but was never paid for them. There was no forced or guided philanthropy. My parents didn’t pay me interest on my savings. When confronted with the fact that all my friends had allowances, my parents eventually relented and gave me… a dollar a week. This was sometime in high school.

I’m not saying that all these clever little schemes don’t help to create financial skills. I plan to use some of them myself. But we should also focus on the core values and character traits that lead to good behavior in general. Indeed, this is also acknowledged in the book:

Finally, I want to help all of you recognize that every conversation about money is also about values. Allowance is also about patience. Giving is about generosity. Work is about perseverance. Negotiating their wants and needs and the difference between the two has a lot to do with thrift and prudence.

So I took many of the topics in the book and tried to connect them with the corresponding character traits in the big graphic shown above.

There are many other ways to encourage your kids to learn traits like patience, perseverance, curiosity, or delayed gratification. Many have been part of cultures and/or religions for centuries. The first way kids learn is by watching their parents, so we must be good examples as well. (I know, can’t I just buy an app or something instead? I mean, thanks Mom and Dad!)

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  1. I agree about parents setting important examples day-to-day. As for the list, I’d also add cooking is an important skill to pass along. It can teach self-sufficiency, health/wellness, and saving money. And if you make it vegetarian cooking – you’re teaching about empathy (to animals) and being a good steward of the environment.

  2. “The first way kids learn is by watching their parents”

    you hit the nail on the head!
    The first lesson in fiscal responsibility starts at home.
    In all the shrieking and yelling about inequality, this one aspect is completely ignored – that inequality is as much due to ingrained habits as it is due to unequal opportunities.

    I grew up middle-class in a country/culture that values thrift.
    I am 30 and have close to a $200k net worth whereas most of my peers are nowhere close.

    • I just got an e-mail that said “According to a recent survey, millennials say they rely most heavily on their mothers for financial advice.” 🙂

    • G , You hit the nail on the head as well. Actions speak louder than words. As a parent you have to aspire to be the values you would like your kids to have.

      Inequality is a fact of life; it is just a natural occurrence of people being different and having different values. Complaining about inequality is like complaining about the weather. You can complain it is raining while getting wet or you can get an umbrella and get on with your life.

      The sad thing about all the inequality talk is the complainers would feel better if the people with the umbrellas would lose their umbrella and get wet rather than get an umbrella themselves.

      Jonathan, Keep up the good work with the blog. I remember your actions spoke louder than just words when you started your blog. The documenting of your finances with your actual numbers in your anonymous days was a great example of good finances in a real world environment.

      • The problem comes when the system is set in a way that makes it extremely difficult for everyone to get an umbrella while others are putting together a large umbrella collection.

        • I don’t think that the system is set up to prevent people from getting umbrellas.
          Sure some people will get an umbrella sooner than some others – but the key is perseverance and developing skills which are needed in the current market.

          • And therein lies the difference between you and those you accuse of “shrieking and yelling”, a difference of opinion about how the system is setup.

            Personally, I don’t have a hard time seeing a system that causes folks who get in over their heads due in part to the actions of banks with multiple billions of dollars in profit to lose their homes, while those same banks get bailed out with billions in taxpayer assistance and continue on their way, as a system that doesn’t support an equitable access to umbrellas.

            And I’m one of those folks who has plenty of umbrellas, so it’s not just about me.

        • If you take out a loan that’s unsustainable then it’s YOUR fault. You should know what your salary can afford. The problem is all people feel entitled to a big house and then when reality bites its a rude awakening.

          Having said that I don’t support bailing out of banks either. If they gave away unsustainable loans, the banks deserve to fail too. This is what the free market is – rewards for the financially responsible and failure for the irresponsible.

          The ability to let failing institutions fail is as much a core component of the free market as the ability to let the responsible succeed

  3. ttfitz,

    What specifically do you mean when you say “the system is set in a way that makes it extremely difficult for everyone to get an umbrella” ? Do you mean economic system, political system, banking system, etc?

    What part of that system “doesn’t support an equitable access to umbrellas”?

    I agree the banks, the car companies, the insurance companies should not have been bailed out. Other more successful companies would have purchased their assets. Propping up companies with government money that you don’t have is wrong on so many levels. It just prolongs and adds to the pain.

    I chose to not deal with any company who accepted a bailout if possible. That is what I can do within my control. I can’t control what happens to me but, I can control how I react to it. Bad things happen to everyone. What you do about it is up to you.

    I really think this is a great subject because it directly effects people and their economic values (Economic Equality Vs Economic Fairness) – Jonathan you should do a post about that subject .

  4. Joey Craig says

    The savings jar/interest/chores technique works wonders. At first my kids hated it (as kids who have to do chores always do) but once they started getting paid they loved it. Then once the savings jar slowly started filling up that got them even more excited. Win win, they do chores around the house and learn how to save money.

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