Do Your Kids Understand the Value of Money? Here’s a Simple Teaching Technique That Works!
By Tom Kirk
At our wealth management services firm in Melbourne, we see it every day. Grade school kids dressed in designer clothes, texting their friends on the latest smartphones, planning the next concert they will attend and how they can arrive there in style. Is it any surprise that in a few years they want a new BMW car when they turn 16, a weekend in New York City when they graduate high school and summer in Europe to “find themselves” before they graduate college? They think money grows on trees. And for them it pretty much has.
In today’s affluent society it is easy to cross the line from wanting our children to have more than we did, to crippling them, financially speaking. If they never learn about the value of money, how hard it can be to earn it, and the concept of monetary discipline, they can be doomed to a life of financial immaturity.
My father was a doctor and everything I needed was very nicely provided for: food, clothing, housing, education, recreation, etc. But there was something I wanted that I had to work for … a car. I worked from an early age and through college to save enough money to buy, insure, maintain and keep gas in my cars. I learned to work, save and spend within my means through this process.
On family vacations with our young daughters we got tired of them asking us to buy some little trinket at every tourist trap or gift store. So instead we gave them each a certain amount of money ($20 initially) and said they could spend it any way they wanted, but when it was gone, it was gone, no more. If they did not spend it all, they could keep what was left.
Later we used the same approach when it came time to buy clothes for the next school year, giving them what we intended to spend and allowing them to decide how to spend it. They quickly learned that if they bought stylish jeans at Old Navy they could buy a lot more other things than if they had bought the latest Lucky Brand jeans.
Their growing financial maturity really paid off for them when they went to college. We had saved money since they were born to be used for their college expenses. When they both were accepted at the colleges of their choice, we told them their “job” now was to study hard and make the high grades necessary to keep the academic scholarships they had earned. We also told them that if, as a result, we did not spend all that was set aside they could have what was left over at graduation. They both graduated with over $10,000 in the bank to help start the next chapters of their lives!
Our daughters got married right after college and immediately became fully emancipated, not requiring or even asking for any support from their mother and me, except for our love and encouragement. We are grateful and proud of the lives they have begun and are glad that when they were young they learned some of the financial skills necessary to be financially responsible adults.
If you have any questions on planning for your children or grandchildren’s college education, one of our WealthCoaches™ at our wealth services firm in Satellite Beach, FL would be happy to discuss the variety of options available to you. Give us a call at (321) 773-7773!
You should not assume that any discussion or information contained in this publication serves as the receipt of, or as a substitute for, personalized investment advice from FirstWave Financial. A copy of the FirstWave’s current written disclosure statement discussing our advisory services and fees is available upon request.
About the Author: Thomas L. Kirk
CPA-PFS President, Founder and WealthCoachTM
- Certified Public Accountant
- Personal Financial Specialist
- Financial Planning Association Member
- University of Florida, BSBA