Using Spare Change to Teach a Child Life Lessons about Saving

I have endeavored to provide financial lessons for my six-year-old by giving her control over her money. I made the decision several years ago to allow her to keep any loose change around the house. There is one catch, she must keep track of how much money is in her “account," a shiny pink ceramic bear coin bank. Every time she adds the money into her bank, she counts it and adds to the total. I have her simply keep a sheet of paper and mark out the old total after adding the new one.

Next to her coin bank is a list of some of her favorite treats: ICEE, ring pop, ice cream cone, etc. Along with the list of treats is a savings goal. At six, it is funny what a child wants to save money for. My daughter once wanted to save up twenty dollars to get a twenty dollar bill (I just went with the flow on that one). Sometimes she holds some money back for one of her treats.  The important point is that she understands the value of the coins and she can comprehend how that translates into choosing how to spend.

It is amazing how a goal as simple as saving money can motivate even the youngest among us. There is a very small chance that loose coins in my household will not be gobbled up by this savvy six year old saver. Give a young saver the idea of what a quarter is worth in the world of “fun dip and tootsie rolls” and see what you can accomplish for 50 cents.

I strive to make it a learning experience when shopping for toys, treats, clothes, and the things that my daughter can pick out. At other times I may create a spending limit based on a gift card or cash amount which forces her to be conscientious of the trade offs or cost. 

There is a specific way I handle a situation when I know she will see an item she absolutely has to have. Before going inside, I give her some change and let her know she can spend it. I remind her that she can choose to spend it or save it, but it is her decision.

This is how I teach my young girl the value of money. I find that this approach is fun and exciting to her and plants a seed for how to handle money and save wisely. 

Kevin Stokes is the proud father a 6 year old who enjoys fishing and spending time with her grandparents. He is the president of Stokes Financial Strategies, LLC., a financial firm in Springfield MO. For 12 years, Kevin has given financial advise for over 400 client households. For a follow-up comment, Kevin can be reached at kevin@stokesfinancialstrategies.com

The Three Lessons to Winning with Money for Kids

My wife and I teach our kids to do three things with money. We created three money containers for both of our girls that say – GIVE, SAVE, and SPEND.  We feel the three lessons below are the foundation of building wealth and being successful with money from the start. We often ask our girls (ages 3 & 5) what we do with money and it brings us so much joy that they understand these three lessons.   

Lesson #1 – Always GIVE 1^st. We teach our kids to give a portion of what we make to God first. This lesson is top priority in our family because He is the reason we have money, a house, and all the things in our house. This is the lesson that we feel is most important to teach our kids so they become generous givers and to understand that God owns it all. If we are to be good Stewards (managers) of His money, we can’t keep it all to ourselves.  

Lesson #2 – Always SAVE 2^nd. We teach our kids to always save for a rainy day and the things we want to purchase. We created the saving chain. Each link of the chain represents a large amount of money ($1,000) we save up each month using our zero based monthly budget numbers. The last day of each month we let the kids cut off the links and we explain to them why we save.  We want our kids to experience the process of saving for large purchases (vehicles, vacations, or future home). We are teaching our kids the sinking fund approach to saving.

Lesson #3 – SPEND $$ on the things you NEED first before WANTS.  This is a difficult lesson to follow not only for kids but also adults. I struggle with this lesson because I confuse wants vs. needs.  I don’t really NEED a new golf club. I ask my kids if they really NEED that toy.  The toy will still be there when they come back. If we can get our kids to think long and hard before spending the money they save, they will make better choices instead of impulse buying.   

  

More is Caught than Taught

Our family is far from perfect.  We try our best to teach our kids through example. Kids watch everything we do as parents and they won’t take us serious if we don’t practice what we preach. This is one of the reasons why we serve at our church and lead Dave Ramsey’s financial classes that teach these important lessons.  We encourage you to keep it simple and follow these basic principles with your kids so your entire family can win with money.  

Sean Saunders is the father of two lovely daughters who keep him loving and growing as a dad. He is also the husband of Jessica and an avid a golf and fitness instructor in Springfield, Missouri.

Do I Get a Quarter for That?

"Do I get a quarter for that?"  

It is a question I hear often, and it is totally a problem of my own making. Perhaps you've heard it said, "Even an atheist finds God in the trenches." In a similar fashion, I have a firm belief that even the most well meaning and knowledgeable parents discover the power of behavioral theory when raising toddlers. Behaviorism can be boiled down to providing a tangible reward for a specific task. In order for it to remain a powerful motivator, the rewards need to continue coming to maintain their effectiveness. Intermittent reinforcement is the most powerful, meaning if it works at least some of the time (screaming, crying, begging), you're likely to see more of it. Most of the time, it probably shouldn't be our first choice as parents, but there are times when I tend to go there anyway.

 

This presents an interesting challenge for me as a dad. One of the most common ways to motivate your kids is to reward them for doing something they otherwise have very little interest doing. In our house, I sometimes resort to quarters.  We have given the boys chores to do, and up to a point they just did them with a healthy combination of over-reminding and cajoling from us. Unfortunately, over time that does lose its luster, especially when they've become highly skilled at ignoring me or their mother and show much greater interest in doing anything but doing what we've ask.  

Enter the quarter. Our boys are assigned to feed the dogs when they get up in the morning. Our four-legged, family friends don't care if it's 4:00 a.m. or 4:30 a.m., if you are the first one up, it is your job to feed them. Failure to do so will result in them annoying everybody who takes breath, even if those older persons are still sleeping.  

 

After 10,000 reminders, I just decided that I was going to pay two quarters for each of the three jobs that were completed daily--two for each bowl and two for being the scooper of dog waste in the backyard.  Initially each boy resigned himself to his job (bowls for the twins, and scooper for the big one), but quickly even the quarters lost their motivation until one of the twins figured out if you get up before everybody else and complete all three jobs you got six quarters. That kid is going to make a great entrepreneur some day.

We have three very different types of earners in this house.  The saver, the spendthrift, and the communist.  The saver, is the child who will always look for additional jobs around the house to earn some extra cash, which he then puts in his bank, and doesn't spend.  The spendthrift only tries to earn money when there is something that he wants . . . like right now.  He would do anything for about an hour in an attempt to earn that new bike or another set of Legos.  (He is the one who will pick up buckets of dog poop, if you post a picture of that elusive Lego set on the window).  Finally, we have the communist. He doesn't particularly care about earning anything, figuring he has more than enough toys to keep himself happy for a long time and the extra work probably just isn't worth whatever he would get.

 

Why do I bring this up?  When it comes to financial education for kids, you have to remember one size isn't going to fit all.  Kids need to be given choices how to earn, and distribute their wealth. And, as is true for many kids, this will likely go in cycles. 

I expect that at some point even the spendthrift is going to save his pennies to earn something. The important thing is to keep giving your kids options to learn and make mistakes.  Since saving is so important, I have worked out a deal for the boys where if they choose to put a quarter into the saving side of their bank, I will also match it with another quarter.  The savings can only be opened once a year, so there is no instant reward for taking the additional quarter. Even now they have started to pick that option more often particularly as their understanding of value has increased.

My boys still have many lessons to learn about money. Thankfully, they're young so Mrs. B and I still have plenty of time to teach them as we continue to learn and grow ourselves.

Breaking Up

When I was a young man I didn’t understand the nuances of relationships.  Really, I was pretty clueless.  Over the years I made a lot of mistakes and got a lot of advice, some good and some bad.  Despite all this well-intended advice I was somehow able to meet the love of my life, and she has stuck with me for an amazing 35 years of trial-and-error.  Now that I am older (much older) I’d like to think that I’ve learned a thing or two about the games people play.

Which is what makes it so hard when you see your teenage and 20-something children struggling with relationship issues.

Over the last several years I’ve watched my sons riding high on the wave of romance, a dance in their step, a wink in their eye, and a joy for life, all because a new girl has appeared in their life.  But in contrast to this I’ve watched in agony as they struggle through breakups.  It is painful for them and painful for me.  What I really wish is that they would just let me run their life; tell them what to do.  That would solve everything, wouldn’t it?  I could just use my great experience from a lifetime of relationship struggles to offer some guidance and straighten things out.

But it doesn’t work that way. It seems that every generation has to work this out on their own.  To paraphrase Dr. Martin Luther King, Jr., is it necessary that darkness exist, just to demonstrate the beauty of light?  Perhaps we have to experience the pain of the breakup before we can fully enjoy the delight of commitment. 

So here’s to all young people everywhere who are struggling with relationships, and to their parents who care enough to try and offer their advice.  May we learn to listen to each other.

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I am interested in your thoughts.  What advice would YOU give?  Reply at dadoonad@gmail.com

Duane Highley is the father of four older children, ages 18 to 29, two of whom are now happily married.  He and his wife Lisa reside in Little Rock, Arkansas.