Teens Don’t Learn to Manage Money Unless You Let Them
Less than three years into her first post-college full time job, my oldest child bought a house. There was no trust fund, lavish gifts, lottery win or other windfall. She did this fully on her own, with an average salary, through good money management. As a result, several people have asked for my secret: How did I teach these skills?
My secret: I didn’t, at least not in a conscious way. Pondering the question, I came to the conclusion that although there are some things that we can share with our children about money management, even (or maybe especially) if our own financial history is spotty, there are some innate traits that make saving money much easier.
Not Having to Have it All, At Least Right Now
Some people are just better at delayed gratification. They are willing to squirrel away money, knowing that they will be able to make larger, more worthwhile purchases down the road. Others struggle with this idea, and want things now. They have the money and a list of affordable things they want, so they buy them all. Likewise, some are able to resist peer pressure, or in adult terms, resist the temptation to “Keep up with the Joneses.” While some people have no problem saying no when their friends urge them to go out for dinner and drinks or to take lavish trips to the islands, others will run up massive credit card bills without realizing the damage until it is too late.
Start Money Lessons Early
As parents, we can help our children by teaching them about finances before they leave home. Ideally, this is done in incremental steps. When they are young, we teach them to count change and allow them to make small purchases. When they get their first bank account, we teach them how to deposit and withdraw funds and hopefully how to write a check (even in today’s mostly cashless society, at some point, they will likely need to do this). We teach them about interest rates and maybe about investing. We warn them of the dangers of opening a credit card account (if you don’t pay or pay late, it costs you more) and of borrowing more than you can afford to repay.
However, many lessons are learned in more subtle ways. Though things are starting to change, in our society, money is still largely a taboo topic. People don’t talk about what they earn or owe. Few parents share their financial situation with their children. BUT, even without discussing the numbers, we can pass our values and feelings about money onto our children and influence their own money habits.
When my kids were small and we went shopping, I said no — a lot. Taking children into a store is a challenge. They want everything they see. The big ticket items I flat out told them they were too expensive. I would point out why it wasn’t worth the cost. I compared that cost to a number of other items (you can buy five books for the price of that one video game). I pointed out that the item would likely go on sale. Sometimes out of desperation, I simply told them we couldn’t afford it now and to add it to their wish list. In truth, sometimes I could have made those purchases and saved myself some aggravation, but I didn’t want them to expect something on every shopping trip or to equate possessions with happiness. In many cases, I believed that the item wasn’t worth the cost, that the money would be better spent elsewhere.
Occasionally, I said yes. Items with a long shelf life, especially those with educational value, would sometimes be approved, but it was made clear that it was a special treat. Purchasing items not on the shopping list was the exception, not the rule. Other times, I softened the no with the promise of a stop on the way home for a treat or to check out new books at the local library.
Learning About Spending – With Their Own Money
When they had their own money to spend, I asked a lot of questions as they contemplated their choices: How long would it be fun? Will it get used up quickly? Is it something for solitary play or to use while playing with friends? I had them do the math (reminding them of sales tax) to make sure they had enough. Then, I let them make the call. If it was a poor choice, it was a lesson learned.
When they got part time jobs, they were expected to save a certain amount for college, and to pay for some expenses on their own. This taught more money lessons. If I got the question, “Can I get this?” In some cases, my answer was, “If you are going to pay for it.” This meant many items were put back on the shelf. Here, too, I sometimes intervened with my questions. If an item was pricey and in my opinion, of dubious worth, I would ask how many hours they would have to work to pay for it, or suggest that they wait for a day or so and see if they still wanted it (this of course is good advice for us all).
Some “Wants” Require Extra Effort
As kids grow, so do their expenses. Their interests frequently require specific, often expensive equipment. The places they want to go are often more expensive and many teens want to go out a lot. Here, too, I set limits. They could go out with friends, but they were going to pay for things on their own. In some circumstances, we’d cover some of the costs. If they would be working over a meal period, they could bring food from home or get takeout and pay for it themselves. Most school field trips were covered in full, but more expensive, extra-curricular trips over weekends would require at least some contribution on their part (group fund raising was generally offered). Not only did this save me money, it was also a good way to determine their level of interest. If they didn’t really want to go, they wouldn’t put in the effort.
Looking back, I see that my teens learned money lessons, even though it was not a conscious effort on my part. My children are usually thoughtful in their expenditures and have no desire to rack up credit card debt. They understand the importance of having savings and manage their money well enough to cover their personal expenses. They pay their bills on time or even early. They only rarely ask for a loan and even then, it is promptly repaid. I guess maybe I have done something right.
A version of this originally appeared at Parent.co
