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Passing the Financial Torch

As a mother of small children, I often assess whether or not I am teaching them all they need to know to be successful individuals. I teach them to eat healthy, I make them wear bike helmets on the way to school and look both ways for cars. I require them to speak to others in a respectful manner. However, until I started restyling my own financial life, it never occurred to me to start them on financial skills. In my mind, it seemed like that kind of teaching was down the road when they were teenagers and had actual bills to pay and things to budget for (like that really expensive pair of shoes that mom just refuses to buy).
I have since changed my mind. Although I do not want to take from my kids the thrill and freedom of having a few dollars to call their own, I don’t see any reason why many of the principles I am learning regarding spending plans and tracking can’t be applied to my children as well. My hope is that by learning the value of money at a younger age, they will be more prepared for when it actually matters. So, I have decided to try an experiment for a few months. I have created a category in my personal spending plan that redirects some of the funds from our family activities budget. I decorated a jar full of poker chips and when the kids do well at their chores, get along with each other, or choose to take on an extra job to earn money, they get to transfer a chip from the main jar to their own personal jars. shutterstock_284334773At the beginning of the month, they cash in the chips for actual money. The kids know that I will cover all the things they need, and we still have a spending category for some family activities, but when it comes to buying a new toy or candy bar, they are now responsible for budgeting their personal funds. Right now, we are dealing with very small amounts, but when they are teenagers, this rule will still apply.
I implemented this plan differently with each of my kids because of their varying ages. I started my four-year-old at the very beginning in the hopes that she will make the connection that things cost money. I got her a  bank where she puts her money. When she has accrued a dollar or so, I take her to the dollar store to pick something out. She makes her selection and handles the transaction and hopefully, it impresses on her that things are exchanged for all those coins she earned. When she sees that her bank is empty, she knows that she needs to start again.  The dollar store has been a great place to start her in this first step to money mastery. In a regular store, she doesn’t understand the difference between prices yet, other than that it is frustrating when most of her selections cost too much.
My boys are 7 and 9 and I bought them both a bank and a blank book to track their spending. In the book, they write down the things they want to buy as a goal. On another page, they write down the amount that is in their personal stash. Occasionally, they will take some money out to buy something small, like a pack of gum or an item at the dollar store. As they add money and remove it, I remind them to write it in the book with their new total. Each time, I have been interested to see them pause and look at the numbers and their list of goals and decide if it is worth it. Because their personal financial plan is so simple, they can easily count their money and see what is left, or estimate in their heads, but the act of writing it down and seeing it on paper has made a difference in the purchases they make, not to mention, they are both getting a lot of enjoyment out of seeing the numbers grow when they show restraint. I try to remind them of some of the same things that my Money Mastery coach, Alan, reminds me in our sessions, which is, you can have anything you want, you just can’t have everything. That means I have to learn what my own priorities are and what a really value so I can have enough money for the things I need and want right now and also for the things I will need and want in the future — there simply is NO WAY to have everything… I must make a choice.   
Occasionally, my children try to bargain with me and get me to front them money that they will “work off later.” To Wantsbe honest, this is something I might have considered before I started financial coaching, but in most of the cases, I have been firm that what they have is what they have and they don’t get to buy things on “credit” nor do they get a second chance to earn back an unearned chip.
Because they are young and because they don’t have debts and bills to pay, their tracking isn’t quite as crucial as it will be when they are older, but I am gratified to see them enjoy the feeling of control, even if it just means keeping that five dollars in their pocket a little while longer. And I have been very proud of them for sticking with saving for the one big thing they want, instead of several small things that they would ultimately be less happy with. That’s a lesson that took me almost 30 years to learn.
My hope is that this will set the foundation for skills my kids need to learn that are just as crucial as saying “please” and “thank you.” As soon as they are old enough to earn money of their own, they will need to create a spending plan, even if it is very simple. The simple act of always being aware of how much you have compared to what you need to pay or save for is a good habit to develop at any age. Financial skills, like any other, need to be taught and it is never too early to begin passing on the torch of Money Mastery.

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