Teaching Financial Responsibility

This one is a little helter-skelter (is that even a word anymore?) but bear with me, I have a point! LOL

As part of my gig as a reviewer for Mosaic Reviews I get to review a program called Family Mint. I’m not really sure what it’s all about yet, but the gist of it is that the program helps teach your children financial responsibility, the need for saving money and all of that.

This got me to thinking about how I was taught financial responsibility as a child. My parents didn’t really sit down with us and explain the true cost of credit, but the more I think about it the more I realize that I absorbed a lot of lessons from them.

I remember being very young and asking my mom for something in the store (a plastic horse, I loved horses!) and telling her to just pay with a check. I smile now because my 6 year old son pulled this recently. I explained it much like my mother did to me, that a check is an easy way to get money out of the bank to pay people without actually having to go to the bank.

I recall my parents going with us to start a savings account after our First Communion. I assume they chose this time because we were still pretty young and it’s the first event that came in our lives where money was a pretty standard gift. I recall saving all of our birthday money and depositing it into our account too.

The money I made babysitting (worst job ever!) went into savings. When I was older and had a real job they taught me to take out only a little bit out of my check and put the rest into savings.

When I was in college and bounced my first check my dad came to my rescue and also gave me a lesson in checkbook balancing.

I want to pass the same lessons on to my kids. I want them to start life as an adult with a firm grasp on what it means to be financially responsible. Sure, we all need bailing out from time-to-time but I want them to be armed with the knowledge of how to avoid situations that may require bailing.

Recently we’ve had some very frank discussions with our oldest. Cate is going to be 17 this summer and already has a volunteer job and does the occasional babysitting. Cate has never had a dollar she hasn’t wanted to spend the second it goes in her pocket. Even as a young child she’d have tantrums if we didn’t let her spend the dollar her pappy gave her the minute pappy left the house. Unfortunately, too often we let her spend the dollar.

Cate is starting the search for paid work, for a summer job. We’ve already told her that there will be rules regarding her money. We’re trying to find a balance between “yes, it’s your money” and “honey, we know how much easier things will be if you save it and college won’t pay for itself”. We’ve decided on the following plan and really haven’t given her much of an option.

Now, before you tell me it’s her money and hers to do what she wants with, please know that the money IS hers and when she’s 18 she will get full and total control of it. Hopefully she learns something in the meantime. This is our plan and it may not be perfect or what you’d do with your children, but please respect that this isn’t your child.

Cate will receive a paycheck. Cate will contribute a small amount of her income to her car insurance. Cate will pay any other bills she owes (as of now she has none but when she gets a job we may give her the option of upgrading to a smartphone on our plan…maybe!) Cate will get 20% of what’s remaining to spend as she wishes and everything else will go into a savings account that is co-owned by her and us.

Saving is just one lesson though. There are so many other financial lessons to learn in life. The true cost of credit. Taxes. Spending management. Sometimes it seems overwhelming.

I’m hoping the Family Mint program will help us navigate this arena but in the meantime we do the best we can by using simple explanations that relate to their life. During our bankruptcy we let them know what was going on and why it was happening, we just talked about it in an age-appropriate way so they wouldn’t be scared. When we have to decide between eating out and buying groceries they are part of that decision. We tell them that while using a credit card isn’t bad, it is an expensive way to borrow money, and as they get older we explain what interest means. I recently explained income taxes to my oldest since she’s going to be paying them soon enough.

I’d really like to have some open discussion about this, either in comments here on our TBH’s Facebook page. Did your parents teach you how to use money? Do you teach your kids? Do you have teens who are working? What about kids who want to spend every penny they get their hands on? How do you approach the subject with your kids? What do you wish you had known? If you could give your child only one lesson about financial responsibility, what would it be?

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