Easy Conversation Starters About Money with Your Kids

This guest post was written by John M. Box, Ph.D., Senior Vice President of Education, Junior Achievement Worldwide.

Sometimes it seems like our children are programmed to turn a deaf ear when we begin to talk about doing chores, saving money or preparing college applications. Many parents struggle with how to broach these topics without nagging, boring or confusing kids, and as a result, the conversation may never happen. Here are a few conversation starters to get your kids talking about money:
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How to Battle the “I Want” Syndrome

Sesame Street Toy StoreMy son is four and has been attending preschool for the past two years. When my husband and I were the sole caregivers, it was much easier to shelter him from consumer influences and keep his desire for endless amounts of stuff at bay. However, as he becomes more immersed in the school “culture” and makes more friends, he has started to notice more and more what other people have. And sometimes, this results in his yearning to have what they have.

In short, the “I Wants” have hit our house hard over the past year, and will most likely continue until we boot him out of our house after high school (and maybe even longer than that…). So I’ve had to think creatively about how to counter the constant “I Want…” reasonably and without resorting to “Because I Said So” every time!. Out of necessity and the preservation of my sanity, I’ve developed a few techniques I use when explaining that we can’t always get what we want, in four year old terms.

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 Personal Finance 

Teaching Kids About Money: Tessy & Tab Money Manager Kit

Tessy & Tab Money Manager KitThe topic of financial literacy and personal finance education has gotten a lot of attention the last few years because our society’s economic woes, which in part stem from our individual woes, have smacked us right in the face. One of my wife’s friends visited us a few weekends ago and she explained that the most surprising aspect about life in Europe was that it lacked the “in your face” consumerism that is prevalent here. When you take such a money-driven capitalist system, as we have here, and couple it with practically zero financial education… it’s no wonder we have difficulty managing money! It’s like putting a bunny in with a bear and expecting the bunny to “figure out” how she’s supposed to survive.

The one thing we do accomplish fairly well is literacy (we are in a multi-way tie for 18th with a 99% literacy rate according to Wikipedia), so when I saw a childhood literacy education company offer a financial literacy kit, I had to ask them for a copy to review. (Disclaimer: We don’t have kids, but I am a kid at heart)

The Tessy & Tab Money Manager Kit is a standalone program that builds on the lessons learned in creating and tweaking their literacy product. It’s designed for children ages three through six and lots of fun interaction between the parents and the child. Tessy & Tab have been featured in numerous websites and publications, including Parenting.

Tessy & Tab Money Manager Kit Contents
The contents of the money manager kit are:

  • An instruction manual that explains the three concepts to teach your child about money – where money comes from, what money is used for, and managing money is fun.
  • Three “magazines” that are used to teach those concepts – Yard Sale, “Save, Spend & Share,” and Earn Allowance.
  • Half a dozen worksheets that help reinforce the concepts (one is a savings plan, how the child plans to save $___ by the time they are ___ years old, with individual milestones, etc),
  • Finally, and I think this is a great piece, there are three “Moonjar Moneyboxes,” labeled Save, Spend & Share with a “passbook.” Moonjar Moneyboxes are parallelogram shaped boxes that fit together to form a hexagon like “piggy bank.” The “passbook” is just a way to record deposits and looks like a check register.

Why I Really Like The Kit

I think the money manager kit is a great way to teach kids about money because it lets children act like adults. When I was a kid, my favorite day in gym class was when they turned the gym into a faux city and we all pretended we were grown ups. We drove around the city, we went to work, we earned Monopoly money, and we could spend the money on things we wanted (like car washes!) or save it at the bank. Children are naturally inquisitive and eager to grow up and the Tessy & Tab Money Manager Kit leverages that to teach them about money.

The Books: You begin each module by reading a short book (here is a sample book). In the “Yard Sale” book, you and your child can read about how Tessy and Tab prepare for and run a yard sale and what they do with the proceeds. At the end of the book, there are questions that engage your child. They have to find certain objects, find two words, and answer story questions (one of the questions in the Yard Sale book is “Why do Tessy and Tab need money?”). There is also a featured letter and number and more literacy-type questions that relate to those.

The Moonjar MoneyBox: The Moonjar MoneyBox is one step up from a piggybank because it takes the one-jar catchall and separates them for one of three excellent purposes – save, spend and share. It’s like graduating from just a checking account to a checking, savings, and online savings account. While the kit recommends that you put 20% to savings, 70% to spending, and 10% to sharing – though there’s no reason why you can’t adjust that based on your needs (and they have instructions on that).

Learning By Doing: Finally, on the allowance guide worksheet, there are several rules that parents must follow to really maximize learning. Don’t buy discretionary items for your children, let them pay for their own items and truly learn the value of money (that’s why they think 70% isn’t unreasonably high when kids have to buy all their candy and whatnot). The second rule is to let them spend their money on whatever they want. If they want to make bad decisions, obviously talk to them about it but if they are insistent, let them! Finally, stick with the program and eventually kids will internalize the concepts.

Overall, I was very impressed with the program and if you have kids 3 – 6 and want a framework to help teach them about money, you won’t go wrong with the Tessy & Tab Money Manager Kit.

 Devil's Advocate 

Don’t Pay Your Children’s College Education

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This is a Devil's Advocate post.

You should not sacrifice your retirement, your savings, or your future financial stability in order for your children to attend college. They are fully capable of supporting themselves, just as generations have before them.

The average cost of a year at a private four-year college institution in 2007-2008 was $23,712. The cost of a year at a public four-year college institution was $6,185. Both were increases of over 6% from the prior year and don’t even include room and board! []

Bottom line (a surprise to no one): College is expensive.

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 Your Take 

Your Take: Pay for Academic Performance for Children

When I was younger (starting around 2nd grade), my mom said that for every 100% I got on a weekly spelling test, I’d get a dollar as my reward. The spelling tests started all the way back in the first grade but really got going in second and third grades, but I’d routinely get a hundred in part because I was brilliant and in part because they told us the set of words ahead of time (my mom knew this). There would be maybe fifty words and then ten or twenty would appear on the test, it was a cinch to get a hundred and anyone who didn’t simply didn’t try or didn’t care. Anyway, as I grew older, the 100s were harder and the prize was made larger until I was in high school when it would be $10 per 100. By high school, though, I didn’t get 100s unless it was something trivial like a health test or something meaningless, so I never went to collect. Anyway, I ended up being a decent student, in part because of the incentive my mom provided, but this is a issue that’s a hot button topic for many parents. Should they “bribe” (or “reward,” as the proponents would say) their children for performance?

My opinion is that you can and should bribe or reward them for performance because that’s how the world works. You get a good SAT score, you are rewarded with admittance into a good college or university. If you get good grades in college, you’re rewarded with a good job. If you perform well at your job, you’re rewarded with more money (maybe!). Giving children incentives for strong academic performance isn’t going to ruin them for the world because the world rewards strong performance with money as well.

What prompted this Your Take post was an article from the New York Times where students were being paid to perform well academically.

What’s your take on this?

 Devil's Advocate 

Don’t Have Kids

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This is a Devil's Advocate post.

Ever hear someone mention that they don’t want to have kids only to hear, invariably, someone ask “why not?” The reason people ask is because having kids is the norm, actively not having kids is not the norm, and so in this DA post I tackle the reasons I think one would decide against having children. I think this particular post falls into the realm of personal opinion and desires, not “good” or “bad” advice, so it’s slightly different from other DA posts.

Kids Are Expensive and Time Consuming!

The number one reason why having kids is a bad idea is that they are expensive and they require a lot of time (time is money!). Given the cost of a hospital stay, which is almost unavoidable, your upcoming kid is already costing you a lot of money and they haven’t even been introduced to the world yet (Read Connie’s story about how much it costs to have a baby). Afterwards, this little tyke is going to eat a ton, run through clothes like it’s the Running of the Brides at Filene’s Basement’s Bridal Gown Sale, and they’re going to have ridiculously expensive hobbies. That’s before they leave elementary school! As the years go on, they get more and more expensive, culminating in college. College, while not required (see this DA post on why you don’t need college to succeed), is basically the minimum of education demanded by society if you want to make something of yourself (or at least that’s the public perception of what society demands).

Tremendous Responsibility

Once you get the past the money, there is a tremendous amount of responsibility when you’re raising another human being. Not only will they be expensive, but you’ll also feel compelled to spend that money because you want your child to succeed. Marketers will bombard you with advertisements about how your child needs to have the latest learning gadget, or how they need to be in this plan or that plan, or how you can’t buy thing particular product because it’s not as good for you as their product. You’ll have to make these decisions, try to make them independent of cost, and still try to provide what you need for your kid to succeed? It’s like when people say they won’t go to the cheapest person for Lasik even if they’re certified and have done thousands of them, they don’t want something that important to be dependent on price; well, are you going to buy the cheaper cereal or do you not want what your child eats to be dependent on price? What’s more important, your child’s health or your eyes? Do you want to be making those decisions?

Your Life Is On Hold

I can’t imagine having children in my early twenties, but that was the norm many many years ago. Heck, I can’t even imagine having a child now, at the age of 27, when my parents had me. With so many young professionals focused on their careers, it’s very difficult to for someone to put it on hold, if only for a little while. Certainly there are plenty who find it more important to raise a family than it is to generate income but many young professionals want to work, advance in their organizations, and make the big dollars so they can, maybe, relax in their older years. Women are no longer looking to become housewives and I think they shouldn’t have to be compelled to feel that way, just like men don’t often look to becoming stay-at-home dads. So, asking anyone to put their career on hold might be a little unreasonable.

I think those are the main reasons why people wouldn’t want to have kids but to be perfectly honest I don’t know (we want children) for certain because I’ve never broached the subject with anyone. If you’re on the “No kids” side of the argument (or at least “no kids for a few more years”), please do share your thoughts. If you’re on the side, I’d love to hear your opinion about these reasons.

 Personal Finance 

How To Financially Prepare Your Kids For College

When I went to college, all I took with me financially was $500 and a laminated ID card from my local credit union. I had no idea what credit cards were, I didn’t really understand the idea behind loans other than the fact that I had the maximum of Stafford Loans, but I did know I’d be perfectly alright because my room and board were taken care of. I had a meal plan with the school and I had all the “stuff” I really needed (clothes, books, computer, etc.) so I was well prepared for school. While I wasn’t poor, not any more poor than your average college student, my resources were just scarce and scarcity educates like no other.

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 Devil's Advocate 

I Don’t Want To Be Rich

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This is a Devil's Advocate post.

Wow, did he just write that? A personal finance blogger doesn’t want to be rich? Is he insane? Should we even be reading a blog about money from a guy who doesn’t even want to be rich? Yes I just wrote that. Yes I don’t want to be rich. No I’m not insane and yes you should be reading and I’ll explain what I mean. Oh, and when I mean rich, I mean like lottery rich. The reason I don’t want to be rich (even though I will strive for it, just like everyone else chasing the American Dream) is because it comes with a lot more problems than it solves and the problems that it can’t solve are the ones that are especially difficult because they can’t be solved with money. Oh, and if the big red sign and the over the top talk didn’t give it away, this is a Devil’s Advocate post. 🙂

100% Of Lottery Winners End Up Dead
Winning the lottery actually kind of sucks. If you can get past the obvious play on words (100% of people end up dead… eventually) and think about the stories of the past lottery winners, very few end up in a solid financial situation a few years after winning. The reason is because all sorts of people come out of the woodwork and ask for a hand because you’re suddenly rich. Not only that, but those people feel as though you’re obligated to help them because you have so much money and if you don’t there will be hell to pay. Another reason? All sorts of crazies come out of the woodwork because they want a piece, legally or illegally, and they will stop at nothing to get it. Lastly, you can’t protect yourself against yourself. Lots of lottery winners quit their jobs, lose direction, start spending money like wild to entertain themselves… and end up coked up and dead in a ditch somewhere because a robbery went wrong. Don’t think this is true? Follow the sad tale of the last Powerball winner.

Lots of Rich Kids Are Spoiled
Why do people work? To provide for themselves and provide for their families. Working 8+ hours a day does wonders for keeping someone out of trouble, so what happens when you don’t have to work? You get yourself into trouble! See, if you were born with a silver spoon in your mouth, a few million in a trust fund, you can likely live the rest of your life very comfortably without working. If that is the case, what incentive is there for you to study hard, work hard, or do anything except play hard? None! It’s very difficult to teach someone to work hard if there is no incentive to do so, kids hardly want to do homework as it is, certainly don’t make it harder by letting them know they don’t ever really need to work. Sure, the “rich kids are spoiled” idea is an unfair generalization but, like all generalizations, it’s rooted in part in truth. Check out Paris Hilton, she’s about to go to jail and she’s lighting up a joint.

Poor People Less Likely To Be Robbed
Who is more likely to be robbed, me or someone rolling in a Mercedez Benz, wearing a Rolex, and sporting diamond studded earrings? If you would rather rob me, you’re a freaking fool. Rob the dude rolling in a Benz on his way home to his mountain villa because the return on investment will be much much higher and the chances of something going wrong is much lower. It’s lower because money is less important to Mr. Rolex, so he has a couple grand on him and you stick him up, he’s going to give it to you because a couple grand ain’t crap to him. You stick me up and I’ll fight tooth and nail to keep my twenty bucks and my Quizno’s frequent sandwich buyer card… and that damned card is expired anyway.

So, the moral of the story is that you don’t want to be filthy stinking rich.

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