My Son’s First Money Lessons

Children can and need to learn about money. I definitely look back on my financial behaviour and wish that some lessons had hit me harder when I was in college, high school, primary etc.  But I have also realised that if I don’t do anything about teaching my children what I now know, they will also wish someone had taught them earlier. If you are not consciously teaching them something, they are learning from society, which may not always be the right thing. However you can change that by teaching them simple lessons about money. No matter what age they are give them some experiences that will have an impact on them.  I am writing this just as a parent who has started trying to impart lessons and hope they will work.  I just want to share what my husband and I started doing very recently with our almost 4 year old son and what we hope to achieve.

We started giving our son a weekly allowance.  Not for free but doing certain things outside the normal scope of what he is expected to do at home.  He therefore earns his allowance by doing tasks such as making his bed, making sure his dirty clothes are in the laundry etc.  You obviously have to also look at the age and what your child is able to do to determine what these extra tasks will be.  At a certain age he will not be getting any brownie points for making his bed and his allowance will be linked to other activities. Making the bed is what is kind of a struggle now. You may have a child who can come up with the weekly shopping list, filing in the office, wash a car etc. I think you have to make the call on the balance between what is generally expected and what constitutes going the extra mile.  The allowance is for the extra mile.  What do we think this will teach him? That money can and should be earned. We also hope it will start to establish the relationship between effort and money.  To understand that your own effort is what brings in money is very important. I think we have a society where too many people feel entitled. If you are giving your child an ultra healthy allowance with no work on their part, don’t think that sense of entitlement will disappear at their first job.  As we have seen often enough, they will want to be paid a higher salary but without any corresponding change in their effort or attitude to work. We hope when our son wants something he always defaults to thinking what he needs to do about it rather than who has to give it to him.  So the day he was waiting for finally came.  He could go to the piggy bank, remove money and we could then go to the shops and buy something. Herein lies the second lesson.  My husband pointed out to him that he could not remove all the money in the piggy bank to spend, only half of it. Since he doesn’t really have an idea yet of what money can do, at this moment this did not have an impact and he willingly obliged.  This is really about starting to instill the value of saving and discourage him from spending all the money he has.  We hope he will learn that the sole purpose of earning money is not to spend it immediately.  Delayed gratification is a discipline that will serve your children. Maybe then when they get a salary they will not live pay-to-pay check.  They will know what it feels like to actually have salaries from two different months meet in the account.  Saving in their mind will be just as automatic as paying the electricity bill.

The last and best lesson came when we were actually in the shop. To be quite, honest I was praying he does not see something he likes and can immediately afford it. My prayers were answered.  He went from toy to toy only to be told he did not have enough money. Though his numerical understanding at this age is still minimal, his understanding of toys is not.  He realised he could not afford the big flashy looking toys that he had initially run to.  His disappointment was obvious when he understood the limitation of his finances. However he did eventually find something he liked, albeit less flashy, and he bought it.  He took it up to the cashier himself, asked how much it was and he handed over his money.  Though he was disappointed at first he was extremely proud to have bought something for himself with his own money. I think it is important to go where they will still be able to afford something.  The experience especially at first has to end up being positive so they do not get discouraged. He also understood what he would have to do to afford the toys he wanted. He has to do extra tasks for more weeks. So he has learnt that he will not be able to afford everything all the time and will have to compromise. He however also learnt that his hard work or rather discipline did pay off.  As we go along I want to introduce setting of goals such as identifying something in particular and working towards that.  We also want to introduce giving – church, buying something for his brother etc. The piggy bank will also at some point evolve to a bank account, shares etc.

The amazing thing that has also come out of this experience is the conversation.  I think children can understand a lot more than we give them credit for.  He now asks a lot of questions about money, how his parents make money what we buy etc. Many of us agree that there would have been some benefit from open, honest discussions about money when we were growing up.  The responsibility for us is also he is becoming a lot more observant over how we are handling money.  Every child is different and different things may work.  But as parent start teaching your children about money. Maybe if enough of us try this something different will happen with this next generation.