If you have a chance, please check out my staff writer post, Expensive Furniture – Worth It?, at Sweating the Big Stuff today!
The following is a guest post from Brian at Until Debt Do Us Part, which he started as a good way to stay focused on his own budget and finances.
My wife and I have really been working on our budget and finances for a little over 4 months now. We have been educating ourselves by reading books, blogs, and keeping an open line of communication about all things money. One of the challenges has been getting our 3 kids on board with our changes in spending.
They have noticed the changes; making statements like “we have not been out to eat in awhile” or “we have not been to the movies in a few months”. We have begun to include all 3 in discussions about our finances. We have not gone as far as breaking out the monthly budget spreadsheet for them, but have broken it out in general terms to give them an overview.
At ages 11,11 (yes, twins), and 8, we want to start to giving them the foundation to build on as they get older. All three have had money units taught in school and have taken part in a number of front yard lemonade sales, so they are fully aware of how to handle money. One good example that we were able to use was about cell phones.
No, we have not taken the plunge yet for them, but it’s looming for our eleven year olds. This was a topic they were interested in discussing.
One night at dinner I asked all three “how much did they think a monthly cell phone bill cost?” Their answers ranged from $25-$150. I gave them the complete overview cost of an average monthly bill, cost of a phone, and how many hours someone would have to work to pay for each phone. They were all surprised at the amount one would have to work in order to pay for a phone. When we put it in terms of their weekly allowance, they were stunned.
After that discussion, the frequency I was asked for a cell phone by my older 2 has decreased. My wife and I have been discussing that this might be the perfect 12th birthday present for them. *Crystal’s comment: Suckers, lol. 
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We continue to insert money talk where we can with the kids, not overwhelming them, just giving them little lessons here and there.
Ice cream is another good example when dealing with my kids. It’s their favorite dessert. We used to purchase it often from the local ice cream man or Baskin Robbins. For the 5 of us to get ice cream, it could cost $12-$20. I explained to the kids that for that same money we can buy 2 or 3 half gallons of their favorite flavors at the grocery store along with cones. Instead of eating ice cream just once, we can have it for a number of days. They all agreed that multiple days of ice cream is better than one. *Crystal’s comment: Surprise, surprise, lol…kids aren’t dumb, hehehe.*
We will continue to expand on budget topics as they get older, banking accounts, check books, credit cards, etc. For now the key for us is to keep it simple and keep it interesting.
How do you discuss money with your children?
My kids grocery shop with me a lot, and they flat out know if it isn’t on sale and I don’t have a coupon, it isn’t going in the cart. (If it is a discretionary item.) They know how to get a deal, that is for sure.
Regarding everyday finances, I need to involve them more. I used to sit with them while I wrote checks and such, but I don’t write checks anymore. What I need to do is write up all our expenses and our income and show them how much things really cost. I think I will do that this weekend, so thanks for the motivation!
I don’t have children yet but I imagine I will look for ways to include in conversations as it comes up. My wife and I may even consider having them participate in our budgeting once they get old enough to understand it.
Great examples of how you explain money matters to your kids! I think it’s so important to incorporate these types of lessons into the everyday things that they experience!
Breaking the cost down in terms of labor and allowance was a great move!
@ Khaleef – Thanks! Keeping it interesting for them I find is the most important thing. The end up learning something and they don’t even realize it.
@ Everyday Tips – Welcome!
I agree! If you try to lay it all out and make it too complex, they might become afraid of finances… But a little at a time that directly has bearing to them is a win-win! Nice approach!
I think it’s a great idea to break down labor and cost. This can be a real eye opener. I once saw a demonstration given to a class of Jr. High aged kids wherein the instructor broke down an average budget (rent, car, gas, utilities, cell phone, etc.). By the end of the presentation, the kids were stunned at where money can go…and stunned that there was little money left for entertainment purposes. It was a great example.
We try and let our kids experience budgeting firsthand. Talking about money and breaking it down is important and we hope that by them seeing it in their lives, will leave a lasting impression. Right now they’re at an age where they get allowance. We explain to them that they need to use their money wisely. If they spend all their money on, say, a toy at the store, that’s it for the month. Sometimes it sinks in and other times it doesn’t
Depending on your child’s age, it could be appropriate to start them on a simplified budget. This helps make it more real for them.
Thanks for this post.
This is a work in progress for me.
Case in point:We went out to dinner the other day, it was $28 or so for 3, and my 7 year old said something like “That’s a lot of money since Daddy doesn’t like to spend money!”
Hmmm….I guess my mantra of not wasting money, but saving and investing has taken hold. Perhaps I wasn’t as subtle as I thought:)
I think you are doing a great job with your youngin’s! Having them understand how money works and the velocity of money is soo awesome to teach to them. I don’t have kids yet but as a coach I’m constantly telling my parent clients to work in money talks with their children. I might even print this out and carry it around with me! Nice work and I know they’ll come out so well prepared that come college you won’t have any worries at all!
I’ve used $1 as a reasonable threshold for toys and impulse buys. So now my son knows that if he wants a toy, the only place he’ll get one for $1 is either at a yard sale or the little aisle at the beginning of target (birthdays/xmas is another story).
We put money in his piggy bank but he hasn’t earned any yet. He’s 5 and the other day he asked me why everything isn’t free. I tried to explain the whole concept of economies of scale and trading stuff and what it was like before people had jobs..doing everything themselves. I’ll have to quiz him and see what he took away from the discussion.
It’s terribly important to cover this subject with children. Especially since, for whatever reason, we really don’t touch on the subject at all in school in America.
Always a good idea to relate it to terms that they can have some interest in. Finance is a boring topic for many people, much less kids. Ice cream is a great way to get the kids motivated. At least until the sugar crash.
I liked this approach… by using the things the kids were most influenced by/interested in, the author turned the money talk into a conversation that the kids could understand and enjoy. I will break out the cell phone bill tomorrow to prove to my son that his ‘free’ phone was anything but.
Thanks everyone! Glad you like the post.
We have a white board with a modified budget on it that hangs in the kitchen for ALL to see. My 11 and 12 year old update it with me. I think talking specific $’s with kids is totally appropriate. I explained a home mortgage to them when they were 9. Yesterday my 12 year old explained to me why getting a tax refund on your personal taxes is stupid! Her view was, why let the government hold on to your money for a year just to return it back to you.
I think you’re doing a great job. We have a 15yo and two a bit younger, 7 & 5. We started having our oldest in charge of buying his own clothes and wants out of his allowance when he was 13, and it’s been working out well.
For you, I would only question the need for cell phones for your twins. Are they often at sporting events, or other activities, where you want them to be able to call you (or vice versa) if necessary?
We are planning on getting a phone plan with our son sometime in the next year. He will be driving soon and doing more activities/jobs and a phone of his own will give me a peace of mind and will provide us a huge convenience. He wasn’t happy with our decision to not provide him with a phone up until now, though we explained the financial aspect vs. need as naseum, but he’s come around. He even makes fun of kids his age who do the walk-and-text.
I’m happy I found this blog. Thank you for sharing with us.
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[...] Brian from Until Debt Do Us Part wrote a guest post for Budgeting in the Fun Stuff, giving great practical instruction for parents in, “Kids & Money – Keep it Simple“. [...]