Money & Kids: What’s A Parent To Do?

“Mommy, I want that one!” “I have to have the new Ninjago set!” “You’re mean for not getting me those Pokemon cards.” “Every kid at school has an American Girl doll except for me!” A simple trip to the store can become a minefield when you cross into the toy section with a young child. We may vacillate between giving in to the request or denying it, but often without any deep thought or introspection about how and what we want to teach our children about money. Many of us well-meaning parents can get a bit flummoxed when it comes to dealing with money and kids.

Fortunately, Ron Lieber recently wrote a fantastic book called The Opposite of Spoiled which offers a common-sense, moderate approach to this often overwhelming topic. In this article, I will use both Mr. Lieber’s concepts and those taken from Positive Discipline to help parents find a way to pass on a healthy, less complicated relationship with money to their kids.

What Do You Believe?

As with any potentially challenging conversation, it is your job as a parent to get straight on your own values first. If you are parenting with a partner, this is a great opportunity to take time to discuss openly your values about money. Since money is often a huge challenge in relationships, it is important to find some common ground and to try and understand where your partner is coming from.

Many of us have complicated relationships with money that began in our own family of origin. If we do not choose to examine and understand these early experiences they can often come up unbidden in the way we parent our children. As with so many hot-button parenting issues, the goal is to be clear and mindful about what values we want to bring forward from our own pasts and which we want to leave behind. This is only possible if we are willing to undertake some level of introspection.

Model Your Values

Next, as Lieber discusses in his book, your job is to model your values. You can really only do this once you are clear on your family’s values towards money. If your family believes in helping others financially, then talk to your children when you write checks to a charity. If you believe in doing work for others, find opportunities to involve your children in packaging food for a food bank. If you believe that children should do work around the house to contribute to the family, then make explicit your expectations for them.

Our children are wonderfully observant creatures, but they also need values made clear to them. Include them in conversations about money—think about what things and experiences your family values, ask for their opinions on how to spend “extra” money, and show them that you want to encourage them to ask questions about money. Even when this can be uncomfortable for parents, it can be helpful for kids to learn concrete lessons about money through actually knowing how much things cost and how your family budgets. If you don’t feel comfortable talking about specifics, you can always respond with, “Why do you ask?” Lieber suggests that this question when asked with warmth and love can actually uncover wonderful information about how and what kids need to learn to help them.

Allowance or Not?

Kids need to have some of their own money in order to learn firsthand how to handle it responsibly. I have found that for my own family and many of the families I work with the most effective way to do this is to have a set amount of money that is given to kids each month. This is not a reward or an incentive, but simply a given. Then, when kids want little things at the store you can ask if they want to use their own money for it. That’s often an easy way to see what really matters to them! In addition, if they want a larger item, you can show them how many months it would take to save their allowance to buy that item.

As I mentioned, this amount of money is not tied to chores. I encourage parents to have certain chores/expectations around the house for their children. These chores are just about being part of a family where everyone helps out. These can be basic chores that are age appropriate, such as setting the table, taking out the trash, feeding the dog, etc. In addition, you can offer extra chores that go above your normal expectations and offer compensation beyond the normal allowance for completion of those chores. Some kids are very motivated to earn extra cash and it’s important that these money-earning chores are beyond the normal expectations of your household.

Often, parents will use a spend/save/give system to help kids structure where their money goes. The idea is that kids should divide up the money they get from their allowance into three distinct categories. Some parents even offer kids additional interest on the money they save to incentivize this process. Other parents may offer an additional amount of money at the holidays or at a child’s birthday to be given to a charity of the child’s choices. This can be an excellent opportunity to show children the wide range of people and organizations involved in helping people, animals, and the environment.

The Opposite of Spoiled

Ron Lieber has very clear ideas about what makes a child spoiled. In his view, spoiled kids have few chores or responsibilities, have few rules that govern their behavior, have parents and others who lavish them with time and assistance, and have lots of material possessions. Part of our job as parents is to help kids in discerning between their needs and wants. It is fine to enjoy giving your child lovely material possessions and experiences, but it is also important that they know the feeling of not getting everything they want, and especially in not getting everything they want right when they want it. As they grow up, our children will benefit incredibly from having the ability to defer immediate gratification.

A Few More Big Thoughts

For many of us, money brings up big feelings, such as anxiety, guilt, embarrassment, envy, self-doubt, shame, relief and more. It is our job as parents to try to get beyond these uncomfortable feelings and give our kids a sense of security and reality about money. In the end, Lieber offers an enviable goal for parents: to give our kids the “perspective to know why they may have more than most people in the world but will probably never have more than every one of their peers.” In addition, he eloquently states, that there is “no shame in having more or having less, as long as you are grateful for what you have, share it generously with others, and spend it wisely on the things that make you happiest.” It is in this space of gratitude and self-awareness that most of us will find the most happiness about our financial situations. What a gift this perspective would be to pass on to our children!

Some Questions To Think About:

  • Have your kids asked questions about money? How have you answered them? How have you felt as you answered them? What is your comfort level in taking with your kids about money?
  • Do you fear your child’s questions about money? Why or why not?
  • Do you and your spouse have similar feelings/values about money?
  • How was money handled in your family of origin? What worked? What didn’t?
  • How transparent do you hope to be regarding money with your kids? How would you handle it if your ten year old asked you how much money you made?
  • Do you worry about raising spoiled kids? How do you safeguard against this?

Check it out:

By Ron Lieber