Kids and Money

You probably aren’t surprised to hear that I’d like to raise my kids to be generous, kind, patient, thrifty and modest–in all areas, including their wealth. I hope they’ll be capable of making smart financial decisions and have a healthy relationship with money.

It’s not surprising because we’d all love for our children to exhibit those characteristics. What is surprising is how few of us are actually having intentional conversations with our kids about money. We all have the best intentions but life gets busy and the kids get crazy. We find ourselves reacting to money questions with short, pat answers. When one of the kids asks if we can buy something we don’t need from Target, the answer they often hear is “not now” instead of a thoughtful answer about opportunity cost or needs vs. wants. For me, part of it was busyness. I also think it was the fact that I hadn’t taken the time to figure out exactly what I wanted to teach my kids about money and I certainly didn’t have a plan for how to do it.

Recently, I set out to come up with a framework that Crystal and I could use to begin teaching our kids about money. We wanted to give them the best shot of having money be a useful tool in their lives rather than a source of anxiety. In my research, I stumbled across Ron Lieber’s book The Opposite of Spoiled. Lieber is the “Your Money” columnist for the New York Times and has done extensive research on the topic of kids and money. I’ve found his book to be a fantastic resource for building a plan to engage our kids on the topic of money.

Lieber claims that his book is “intended to start conversations about money in our families, schools and communities. But it’s meant to be only the first word, not the last one,” and neither he, nor I, claim to have it all figured out. Keeping that in mind, I thought I’d tell you about some of the ideas in his book that I found helpful and interesting. If you have kids (of any age) and any of these ideas seem interesting to you, I hope you’ll pick up a copy and read it for yourself.

  • Start talking to your kids about money early.  Be open, honest and intentional.
  • Every money conversation is also about values. Allowance is about patience. Giving is about generosity. Work is about perseverance. Negotiating needs and wants is about thrift and prudence.
  • There are Big Questions that most parents will hear at some point. Are we poor? Are we rich? Why can’t I go to private school? How much money do you make? Lieber offers a list of possible questions and his suggestions on how we might frame our answers.
  • Lieber suggests asking, “Why do you ask?” when we’re faced with a big money question from one of our kids. It buys us a little time and helps us get to the root of where the question is coming from.
  • His general guideline for allowance for kids under 10 years old is 50¢ to $1 a week per year of age. Start no later than 1st grade.
  • He suggests that we not tie our kids allowance to chores around the house but rather use it as a separate teaching tool that gets sharper and more potent over time.  Let chores be something that everybody does for free to keep the household running.
  • The Land’s End Line–use this rule when setting spending boundaries and teaching needs vs. wants with older kids.  Basically, if your kid needs a new pair of rain boots, you tell them that you’re willing to cover the cost up to the price of a new pair of rain boots at Land’s End (or pick your own line.) Any additional cost is up to them.

So far, our kids each have a Give, Save and Spend jar that acts as their bank. We recently spent some time allocating the money they made at their first lemonade stand and had some good conversation about giving and saving.
We haven’t started an allowance yet but plan to very soon. Also, Cooper lost his first tooth a few days ago and Crystal and I were prepared to have a conversation about the tooth fairy since Lieber also covers that in his book.

I hope this has encouraged you to start having intentional conversations with your kids about money. If you choose to read The Opposite of Spoiled  I’d love to hear what you think. I hope to continue learning about this topic and plan to keep talking with my kids about money. I’ll keep you posted! In the meantime, do you have any thoughts or ideas on how to engage kids on the topic of money?

Geoff Hall, CFP®
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My wife, Crystal, and I have been married for 11 years and have two kids, Cooper (10) and Rhodes (8.) When I’m not spending time with them you might find me downtown serving at our church, pushing my limits during a mountain bike ride or having coffee with a friend in the Five Points area. I've been a financial advisor for 29 years and I'm thankful for the privilege of shepherding my family of clients through the ups and down of the markets, and of life for that matter.