While I’m certainly no expert, as my kids are only 7 and 4, I do think we are moving in the right direction with our girls and how to save money. When I was a kid, my parents basically said, “Save every penny you can, and you’ll be fine.” Well, I’m a spender by nature and didn’t really ever understand how to save money. Fast forward many, many years, and my husband and I found ourselves in a bit of a financial crisis. (You can read all about that issue here.)
After my husband and I got our act together, we began talking to our girls about money, budgeting, etc. Obviously, this doesn’t stick well with the 4 year old, but our 7 year old is already applying some of the principles she has learned. We talk about our money a lot, in vague terms, because how much money we make is none of her business. She understands that Mom and Dad both work, but that does not mean Mom has money and Dad has money, that means “We have money.”
She also understands that all these fun things she wants to do costs money, so that means we can’t do fun stuff all the time, and sometimes we have to say no just because “It’s not in the budget.” We recently had to explain to her that Annie gets pizza nearly every Costco trip because a slice of pizza is $2.15, whereas she cannot have her favorite food much because it is sushi, and that costs $10 a roll. We even broke it down in division terms, and Annie gets 5 slices of pizza for every 1 of your sushi rolls. Girlfriend needs to pick a cheaper favorite food.
Most importantly, we discuss with Lillian how to manage her money, and what she can do with it. My BFF Dave Ramsey suggests children should have an envelope system, just like adults. While Lillian isn’t quite there yet, we do discuss the three basic envelopes with her (Tithing, Saving, and Spending). She is currently a HUGE saver, so we don’t push the spending with her. Here’s a breakdown of our money conversations, and our deals we make to engage her in the budget friendly conversations.
You want ________________, you save for it. Currently, Lillian is saving up for a better tablet. She has a Kindle 
Fire, (that she saved for and bought with her own money). But it is a couple of years old, and she would like an iPad. We discussed with her that an iPad costs about $300, and she would need to buy a protective case as well. So, $340 should be enough to purchase the iPad. She got a jar and puts every penny she gets for birthday, chores (we don’t do allowance, just random surprise dollars), tooth fairy, etc. in the jar. We count the jar regularly so she sees how easy it is for money to add up.
By summer, she should have enough for the iPad. I’m so proud of her diligence, and we reward that with surprises. Like you bathed the dog without being asked, cleaned up the bathroom after, and had a happy heart while doing all of that. Here’s a dollar for your jar. Thanks for helping out around the house.
Talk to your child about the family budget.
Lillian loves to run. We are super encouraging in this adventure, but we also
don’t want her to get arthritis at the ripe old age of 15, so we put a fair amount of money into her shoes. When she needs a new pair of running shoes, I typically budget $40. When we get to the store, I tell her how much we are planning on spending on new shoes. After searching, and picking out what she likes, the shoes might be $50. That’s when we talk about her part of the bargain. “Mom planned for $40 shoes, these are $10 more, so if you really want the mint green shoes, over these blue shoes, that’s fine, but you will have to pay me $10.” While $10 isn’t that big of a deal for me to pay, it teaches her such a valuable lesson. You can have the item you really want, if it is worth sacrificing some of the money you are saving for your iPad. I’m fine with it, and I understand wanting shoes you love, but you’ll have to earn more money before you can have your iPad. Sometimes she chooses the cheaper shoes, sometimes she decides putting forth her money is worth it. I’m really fine with either decision and she knows that, which is super important. If you can afford the item, and you’ve budgeted for it, you shouldn’t feel guilty over spending money.
Give it to Jesus.
We don’t discuss tithing as being 10% yet, but we do talk about giving money to Jesus by giving to the church. Most Sundays, she just grabs a dollar or so out of her jar and brings it to put in the offering plate. When she forgets she says, “I forgot my money this week, so I gave Jesus all the love in my heart this week.” It’s not a guilt thing when she forgets, because I don’t think God wants us tithing out of a guilty heart, but out of a joyful thankful heart. We just try to remember for the next week.
I’ll pay for half.
We’re in Target, the art set she’s been eyeing is on sale, and she really wants it. I often say, “I’ll pay half if you can tell me three nice things you did today.” After she lists her things, I’ll say “I think that’s worth the $5 or so I’ll give you. Thanks for looking for ways to be kind today.” Then she pays the other half. She’s a great kid and deserves a “happy” every now and again, but we also want her to learn that money doesn’t grow on trees. Often, when she learns that I’ll only pay for half, she decides she doesn’t want the item. When she has to sacrifice something for the item, she finds it really isn’t that important to her to begin with.
There’s no buying on credit.
No, Lillian, you can’t have the iPad now, and just pay Mom and Dad back when you have the money. That’s not how this works. We don’t buy things unless we already have the money, and can pay for them. ESPECIALLY, when it is something we want, not something we need.
Give them ways to earn money.
Extra chores, selling old toys that are still in great conditions, going to help the grandparents around their house. We don’t do allowances because they are 1. hard for us to keep up with, and 2. sometimes you just help take care of the wonderful house God has provided for us. So, we often come up with extra chores like cleaning the baseboards, that can earn you a couple of dollars. Also, I reward the attitude around the chore a whole lot. I’m not giving you a penny for cleaning you room while whining and crying. But cleaning your room well, while singing and smiling, that may just earn you a few more dollars in your jar.
