Some conversations with the kids take more brain power to explain it in an appropriate way.
Not everything is easy breezy beautiful. While my money story is changing daily for my own great working relationship with money, it’s not something I talk to my kids often.
Money and I haven’t had the best relationship in the past. Like many young adults, I went into college with no working knowledge of what to really do. Credit cards were my downfall and my savings was non existent.
The great thing is I have time with my kids to teach them how to treat money with the respect it deserves. I want my kids to love money, not resent it. They will see how to appreciate the ways they can circulate it and invest money with ease.
Laying The Groundwork For a Healthy Relationship with Money
There is still confusion looming with my 10 year old about why she has to be 18 to access the money in her savings account. She’s not so much mad at me but with the laws surrounding minors and money. This led to a great teaching moment to what she can do with the money she does have in her immediate possession.
This she understands and likes how she can do different things with her money. One of my biggest fears is sending my children out in the world not prepared to handle their financials.
It’s one of those things not taught in school so it’s on us, as parents, to be intentional about teaching. My relationship with money was non existent and then it went down hill when I got sucked into the credit card trap more than once. I didn’t have a grasp on having your money work for you through investing. While I saw my mom give to our church weekly, it wasn’t something we discussed. And savings, you spend what you get, right? As a young adult I didn’t appreciate money which didn’t serve me well until I changed my money story.
Conversations With Kids About Money
My ten year old has been asking some very weighted questions about money lately because she has begun to make some through selling her things she has grown out of on eBay. Our arguments are heated because in all honesty, I don’t know what to say.
The thing is I don’t know how to explain it to her and that’s what I’ve told her up front. So my goal is to do research so we can have civilized conversation. She is my guinea pig but in that way it’s a bonding experience because we will be learning together how to have a loving relationship with money even as a tween.
There are still books I want to read to give her an intellectual answer that will satisfy her current disdain for the leagal system reagarding her money.
Give, Save, Keep, and Invest
For now, all she wants is to have control over how her money is allocated. Together we created a modified Dave Ramsey jar method. These four ways can be a game changer for the relationship my children have with money.
- 50% Keep (short term) – This is what she wants to do with it. Spend or save a little for something bigger.
- 30% Savings account (emergency or big purchase) – I explain this is an emergency fund or for a car when she is of driving age.
- 10% Give – She chooses the charities she wants to donate to.
- 10% Invest (long term) – We talked about how this is super long term. I explained to her in way she would understand how interests works. This proved to be a little more difficult because I don’t necessarily understand the ins and outs. Telling a 10 year old about compounded interest goes something like this: If you keep putting money into an account now your $20 could grow into $2000 over time. As you keep adding to it, you could have millions by the time you want to retire.
She liked that and her eyes lit up. By separating her money into piles and knowing exactly where it is going gave her ease. She knows that she can now have her money work for her, have some to circulate for things she wants, save some for a bigger purchase and most importantly give it away.
Becoming An Example For Younger Generations
This set up might not be perfect but the thing is it can always be adjusted. As she grows, so will her relationship with money. And now she is starting to set an example for the younger kids. While their capacity to understand might not be there yet, they know the basics from their sister.
There is no way to prevent her or my other kids from having debt or making mistakes in the future. At least now I am able to lay the groundwork for financial understanding instead of when they are knee deep in debt trying to dig their way out.