What are you teaching your kids?

iVillage Member
Registered: 05-08-2003
What are you teaching your kids?
5
Mon, 05-26-2003 - 7:58pm
Hi,

I was just looking at some newcomers posts and was thinking about how alike we all are. I suspect none of us would have gotten into our debt messes if we had been taught how to use credit wisely. I almost typed there "if we had been taught how to budget and manage money" but then I changed my mind, because in fact I have accounting training and can budget and manage money just fine, millions of dollars worth in fact, so that's not the problem. Before credit cards came into our lives I bet we all budgeted and managed money just fine, we had no choice but to, and if we screwed it up we learned the hard way what the consequences were and couldn't and didn't bail out the situation with a credit card...

Anyway, before I start ranting about credit card companies and their marketing ploys I had better just get back to my question (but oh my blood boils when I think of what they do and where they want us! Did you know people who pay off their credit card balances each month are called "deadbeats" in the credit card industry?).

Okay, back to it. What do you plan on teaching your kids about credit cards, about budgeting, about money?

My daughter age 4 got a cash register for Christmas. It had two toy credit cards with it. I took them and gave her toy cash and coins. I still have the toy cards in my desk. Occassionally she asks for them because they make an "approved" sign pop up and ding when you slide them through a slot. So I let her have them to make it go "ding" and then I take them back when she's not playing with them. I really don't know what to think about them.

So far when we go out shopping I've been using cash to buy anything we need so that she sees me using money, we always use money on our family outings too. Ocassionally I've used a debit card when it's been groceries I'm buying and I make sure to tell her that I have money in the bank and I'm just giving the cashier the secret code to my bank account. Whenever she asks for something she sees in a store or on t.v. I tell her to ask me again when it's her birthday and if she'd like that item as a birthday present I'll consider it. If it's something small she sees while we're at the dollar store, I tell her that she'll have to wait because she doesn't have any money with her and we're not here to buy that item. then next time we go out to a mall she can bring her own $2 and buy it if she still wants it. This seems to work, she did in fact wait for a second trip once to buy balloons and a balloon pump, and went back another time for some fancy looking pencils but ended up buying something else instead (a surprise for me for mother's day!). What I've been hoping to do is not have one of those "instant gratification" moments with her, where she suddenly wants something and instantly gets it. We're also making it clear to her and DS3 that Mommy & Daddy don't just run out buying them toys, we'll buy them stuff for birthdays, christmas, and the easter bunny will bring some at easter.

We're not at the point of giving allowances yet. I really don't know what to think of all that, I'm sure we'll have to tackle that issue sooner than later though. I've read Mary Hunt's book Debt Proof Your Kids, I liked it in principle, don't know if I'd follow it though.

Are you guys prepping your kids?

Lorraine




Edited 5/26/2003 8:13:58 PM ET by birdiecheeks

iVillage Member
Registered: 03-27-2003
Mon, 05-26-2003 - 8:17pm
Great question!

We have a 2.5 year old, so we aren't teaching him anything specifically yet, but my opinion is that the best way to teach is through example--and by being here and trying to improve our habits, we're all giving our children the best example we can.

Other than that, our son already has an allowance, although I keep track of it. If we're out and he sees something that he really likes and I think it would be a good purchase (a toy that I think he would get a lot out of, something he's been wanting for a long time, and so on), I'll buy it and take the money from his allowance. He always uses his allowance much more slowly than dh or I, and he purchases something only very occasionally. Already, if I am going to let him buy something, I'll say, "you have $x in your account. Would you like to spend some of it on this? You'll have $x left if you do." Then, I usually have repeat the core question, "Do you want to buy this?" I don't think he understands much of that yet, but I'm hoping it's building a foundation for discussion when he is able to understand it. We'll gradually turn over control of his allowance as he demonstrates an ability to understand and manage it.

I would like to institute a Mary-Hunt-esque 10-10-80 plan, where we each save 10%, give 10%, and only spend 80% of our allowance, but I haven't started that yet. We are working toward it in our overall budget, though.

As for the toy credit cards, I'd go ahead and let her use them, personally. You can call them "debit cards" and explain that when someone uses them the money comes out of their checking account. Later, you can help her pretend she has a checking account, and every time she runs a card through, she can record the amount and see how much money is left in her checking account. It can be fun and educational. You should also, I think, explain that another type of card is the credit card, and explain how they work, and also that it's a really bad idea to use them except under very specific circumstances (whatever you believe those may be). Keeping them away from her probably only makes them more enticing and, in the long run, more dangerous, imo.

Great question!

Blessings,

Heather

iVillage Member
Registered: 07-26-1999
Mon, 05-26-2003 - 8:58pm
This is a great question. My mum (who's never had any credit card debt in her life), never had a mortgage-just a small bank loan to buy property and they built the house I grew up in paycheque by paycheque-thought that not having and not using credit cards was a way to teach me not to use them. Ie, she thought that by me seeing her just write cheques or pay cash, I would learn not to use credit cards or at least to use credit wisely. Nope, not one bit. Perhaps seeing her use them and pay them off every month might have helped me, I don't know.

I remember going to bank with her practically on a weekly basis from a very young age. I knew that she put cheques in and got cash out. I knew that when she wrote a cheque the money came out of the bank account. I understood all that; I wasn't clueless as to how it worked.

Also when I was a child my dad would give me money every once in awhile. I was always allowed to spend it on whatever I wanted. I never had a savings account as a child---I was 13 I think before I got a bank account, and that was only so I could cash my cheques from babysitting. My point is that I was never taught to save money as a child. When I started making my own money (at age 12, babysitting, and it was a lot of money over my teenage years), I continued to think that I could get whatever I wanted as long as there was money in my bank account. Don't get me wrong, I'm kind of stingy and HATE to part with money, but all the same I never had the concept of how important it is to save money instilled in me. No matter how cheap I may be, I still always spent my money if there was money to spend. Then it extended to spending money if there was room left on the credit card.

I think that the most important thing to teach your kids is that IT IS IMPORTANT TO HAVE A SAVINGS ACCOUNT so that you are never stuck in an emergency, so that you will always be able to take care of yourself. I think that this must be balanced with wise spending of your money so that you can enjoy your life too. If I ever have children I will have a savings account for them from their fourth or fifth birthday and I will take them to the bank when they have money so that they can deposit it and see the amount grow, and I will also instill in them the practice of asking them (and have them learn to ask themselves) whether they really WANT something before they buy it. I know we all have a zillion things that we charged on impulse and don't want/got rid of years ago.

So, a) teach them the importance of saving, not spending just because the money is there, and b) teach them to ask themselves if they really want something before they buy it, so they hopefully learn the value of money.

Rebecca

Avatar for cl_beckymk
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Registered: 03-19-2003
Mon, 05-26-2003 - 10:01pm
You know...I'm not really sure there *is* a way to teach it. If anyone shouldn't be in credit card debt it should be ME. My parents *never* used a credit card except for 2 specific occassions that I know of my mom mad it absolutely clear they pay it when it comes in. The first one was for my Senior Prom dress and the 2nd time was for my wedding cake.

Not only that but I had a Home Ec. class in High school that taught all about interest, etc... on credit cards, so I went fully into it with my eyes wide open and I *still* got into debt.

It wasn't until I bought houses that I went into credit card debt big time (I was one of those the bank says we can afford X - which of course was stretching us extermely far and we got as much house as we could possibly afford and well then life happens!), plus DH brought some to the marriage ;).

I just explain interest in simple terms, like how they earn interest on their savings accounts, when you use credit cards you pay interest to that company for lending you the money, etc... My worst one is the ATM machine...I always have this fear they will think you can just get free money. I do explain that it is money in my account and I have to put it in first before I can get it out, etc... We shall see.

Becky

iVillage Member
Registered: 04-19-2003
Mon, 05-26-2003 - 11:13pm
Great question Lorraine,

I am not doing anything at the moment as my kids are 2 yrs and the other 6 mos but I do have an idea of what I want to do.

First I am trying really hard to watch what and how I say things around my kids. Instead of "we can't afford it" or "we don't have money for that" I am trying to say "I don't want to spend my money on that" or "I would rather spend the money on xyz than buy abc". I want to teach my kids that they have choice and I also want to teach them to come from abundance rather than scarcity.

I like the idea of using cash. Already my ds, at the age of two, knows that when we go shopping we need a "card" (debit card). So I am going to start using cash more except for larger purchases. I don't feel safe carrying around a lot of cash.

When ds is a few years older I will take him to the bank to open up an account. He than can deposit his allowance (when we start giving him one) and gift money. I think it is important to show him how to save. I am not sure of the exact percentage I would use but I would have ds save at least 50% of his allowance and he can spend the other 50 on whatever he wants. When he wants to make a bigger purchase we will have to discuss it and come up with a plan to save the money for it (not sure how that would look right now).

I think it is extremely important to show kids how to save and how to spend. Most of this will be by example but just doing it and not explaining it and teaching them isn't the answer either. Going into the teen years is a whole other story - hopefully I will have a plan by then.

Sandra

Avatar for mquin73
iVillage Member
Registered: 03-27-2003
Tue, 05-27-2003 - 12:53pm
I think this is a great question! My kids are 2 and 4 and I'm not currently teaching them anything to do with money, but I know I should start! :-( Especially with my 4yo. He's is constantly telling me that he wants this and he wants that. I have been telling him that maybe he should ask Santa for it or I just say "uh huh". I never have really been bad with money, I can actually budget quite well. Dh says that he's amazed at how we can always be on the positive side every payday! lol

IMO I don't think just learning by example really teaches you how to handle your finances. I didn't grow up living with my parents but with my grandparents. Neither of them ever used credit cards. My grandpa used to pay for everything with cash, including his vehicles. The things I wished they would have taught me was actually sat me down and explained to me how things worked, however, they were VERY private when it came to finances. I also wished that they would have opened an account for me when I was really young and showed me how it worked. I didn't have an account until I started working at the age of 15. And then I worked all during the school yr and b/c I was a *teenager* I didn't want to work during the summer time so I quit! And then I ended up spending everything I had worked and saved during that summer.

I think the worst thing that I did was get a credit card in the first place. I was 18 when I got my first one, and never having been really taught about credits cards I went wild. I think another thing that played a big factor was the fact that I had low self esteem and having/getting stuff was filling that hole. After finding Flylady I know that I don't need all that STUFF. I guess it really didn't help that my family is a little materialistic as well. The bad thing with dh is that his family is materialistic as well, as least his father and mother are. His father more so. I think he equates things with love.

Well, I need to get on the ball. I definitely don't want my kids doing the same things as me. I may have to try what some other's are doing. I like the fact that one poster stated that she is watching what she says around the kids like "we can't afford that", and instead saying "I don't really want that". I have a tendency to say that we don't have the money or we can't afford that. It will take a little work to redirect myself, but I'm hoping to accomplish that! lol

Michelle


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