As part of their schooling this year, my children are learning about financial responsibility. I looked a long time for a curriculum to use and finally settled on Dave Ramsey's Financial Peace Junior (aff link). So far, it has been such a wonderful experience for all of us, but especially for me as I have long struggled with the entire concept of an allowance. (But more about that later.)
Anyway, earlier this week my son went through his savings and counted up all his money. He was quite surprised and pleased at the amount and asked me if he could spend $17 of it on a special toy he really wanted. I agreed since he had chosen to put some of his spending into his savings, but told him that he would have to wait until our next trip into town to get it. He wanted me to order it from Amazon, but I refused because I think he is too young to understand the dangers of ordering online. In my opinion, it is too easy to overspend online if you don't understand the idea of budgeting and the value of money to begin with.
So finally, after three days of waiting (somewhat impatiently), we prepared to go into town this evening. I told him to get $20 out of his savings, but when I walked up, I found him taking ALL of his money out of his savings and putting it in his pocket. I made him put it all back except for a twenty dollar bill. He wasn't mad, but a little annoyed that I made him do so. Then as we got into the car, I told him to put his twenty in his wallet, which he keeps inside the car.
I had a list of errands to run, so we made a few stops before we arrived at the store where he was going to buy his toy. And then we went in to purchase it.
But his money was gone.
He hadn't put it in his wallet like I had told him and somewhere along the way it must have fallen out of his pocket. We headed back out to the car to see if it had fallen out in his seat, but no such luck. As I shut the door and started the car, the realization sunk in and he began to cry.
I felt so bad for him. It was all I could do not to turn off the car and go in and buy him the toy with the $20 I had in my own wallet. I wanted to so badly, but I realized this was one of those invaluable teachable moments that I wanted him to remember forever. I hugged him and told him how sorry I was that he had lost it.
He wanted to go home and get another $20 out of his savings. That immediately snapped me out of thinking about buying him the toy because what kind of lesson would that teach? If you lose money, don't worry, there's plenty more of where that came from? You can just get more out of savings? Or if you lose money, someone will give it to you anyway?
I refused and told him he was going to have to earn it back with chores. Since the maximum he's allowed to receive each week is directly related to his age ($8), it's going to take three weeks to earn the twenty back since he has to put some away in giving (and spending).
He cried pretty much the whole half hour it took to get back home and then had to be comforted by his father for a little while. But fortunately for all of us, he's a pretty happy little kid so he was back to his smiley little self by dinner.
I hope I did the right thing and that the lessons he learned tonight are:
Anyway, earlier this week my son went through his savings and counted up all his money. He was quite surprised and pleased at the amount and asked me if he could spend $17 of it on a special toy he really wanted. I agreed since he had chosen to put some of his spending into his savings, but told him that he would have to wait until our next trip into town to get it. He wanted me to order it from Amazon, but I refused because I think he is too young to understand the dangers of ordering online. In my opinion, it is too easy to overspend online if you don't understand the idea of budgeting and the value of money to begin with.
I had a list of errands to run, so we made a few stops before we arrived at the store where he was going to buy his toy. And then we went in to purchase it.
But his money was gone.
He hadn't put it in his wallet like I had told him and somewhere along the way it must have fallen out of his pocket. We headed back out to the car to see if it had fallen out in his seat, but no such luck. As I shut the door and started the car, the realization sunk in and he began to cry.
I felt so bad for him. It was all I could do not to turn off the car and go in and buy him the toy with the $20 I had in my own wallet. I wanted to so badly, but I realized this was one of those invaluable teachable moments that I wanted him to remember forever. I hugged him and told him how sorry I was that he had lost it.
He wanted to go home and get another $20 out of his savings. That immediately snapped me out of thinking about buying him the toy because what kind of lesson would that teach? If you lose money, don't worry, there's plenty more of where that came from? You can just get more out of savings? Or if you lose money, someone will give it to you anyway?
I refused and told him he was going to have to earn it back with chores. Since the maximum he's allowed to receive each week is directly related to his age ($8), it's going to take three weeks to earn the twenty back since he has to put some away in giving (and spending).
He cried pretty much the whole half hour it took to get back home and then had to be comforted by his father for a little while. But fortunately for all of us, he's a pretty happy little kid so he was back to his smiley little self by dinner.
I hope I did the right thing and that the lessons he learned tonight are:
- You have to work hard to earn money.
- Money is valuable and should be managed carefully.
If you'd like to explore other resources that I have on financial literacy for children, try this post that lists 7 books that help teach financial literacy to kids or this one with lots of financial literacy resources for families and children.