27 Apr 2018 A Very Important Purchase
Future Financial Advisor
My son Cooper and I love to go to Ace Hardware in Seaboard Station. Usually we go to get something for a house project but I’ll admit we occasionally go just for the free popcorn and to watch the model train chug around the track suspended from the store’s ceiling. On our most recent visit, we bought something that I found to be particularly exciting. A $2 tire pressure gauge. What was exciting about the purchase wasn’t the actual item itself but the fact that it was the first thing that Cooper, who is 4 1/2, had ever purchased.
About six months ago Coop started asking questions like, “Dad, why do you go to work” and “can we buy this toy” and “why don’t we buy bigger house.” It would have been easy to brush off Coop’s questions with answers like, “we can’t afford it” – which isn’t always truthful or “because I said so” – which isn’t very satisfying. Instead, inspired by a couple books I’m reading, I seized the opportunity to start having conversations about money with him.
In addition to talking to Coop about money we also created a bank for him – 3 mason jars, one for giving, one for saving and one for spending money. Anytime Coop receives money we put a predetermined amount into each jar. It was from his spending jar that Coop decided to withdraw some money to take with him to Ace Hardware that day. On the way to the store, I talked to Coop about how he had a certain amount of money to spend and how he could only spend that money once. We talked about how it was important to only buy things he really loved.
It was endearing to watch Coop dart around the store asking how much different things cost and wondering aloud whether or not it was something he really loved. Somehow, he ended up choosing the tire pressure gauge. I don’t know if it’s something he’ll always love but it was a great experience for him – and we did use it to check the air pressure in our car tires!
The way we think about and handle our finances as adults is directly impacted by the experiences we have with money as children. The financial decisions Cooper makes twenty years from now will be shaped by the experiences he has today and over the next several years. Today, in this age of affluence, social media and consumerism it’s more important than ever to have conversations about money with our kids. With that in mind here are a couple important things…
- It’s never too late to start. Well, if your kids are in their forties you might tread lightly!
- We don’t have to manage our own personal finances perfectly – none of us do – to be able to have a positive impact on our kids’ financial lives.
- Oftentimes, teaching our kids about money teaches us about money. I know it does for me.
- When asked a tough question about money, ask, “why do you ask.” It buys you some time to think through your answer and helps get to the root of the question. I picked this up from Ron Lieber’s book below.
Want more information? Here are two books you might find interesting. I just finished the first and I plan to read the second, next.
Make Your Kid A Money Genius (Even If You’re Not): A Parents’ Guide for Kids 3 to 23
Also, look for some Beacon events on kids and money soon.
In the meantime, we’d love to hear your questions and stories. How are your money conversations going with your kids and grandkids?
