Kids & Money: Counterintuitive Advice that Works!

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Save more, spend smarter, and make your money go further

Growing up, I suspect my parents talked about money more than the average family.

From a young age I knew how much they earned. I knew how much our house was worth (before you could just search prices on the Internet) and I knew that while we weren’t “rich” in the dollars and cents kind of way, my parents felt rich because they followed their own rules and prioritized their money.

While neighboring families may have kept mum on the topic, my Middle Eastern parents chatted casually (and out loud) about their attempts to ask for raises, the cost of everything and the threat of layoffs at my dad’s company.

It’s counterintuitive to the way some might think to raise their kids. After all, it’s not exactly America’s cultural norm to speak openly about money, which is considered more of a taboo topic amongst friends and family than religion or politics.

Fast-forward two decades and I suppose my career choice shouldn’t come as a surprise…and possibly why the real estate section of the NY Times is my favorite thing to read on the weekends.

I’m grateful for the fact that my parents acted outside the box. Sometimes it makes all the difference. Here are some additional counterintuitive strategies for raising money savvy kids I look forward to practicing with my kids – once they’re out of diapers.

Don’t Call it an Allowance

Instead, call it earnings so there’s a linkage between hard work and pay.

And it’s best when the work to exceed the expected duties of just being members of a household. For example, some parents argue that kids should make their beds and wash their dishes without reward. (I agree.)

Instead, offer an allow, er, earnings, when they perform duties outside the normal realm like, say, washing mom’s car on a Saturday, helping to clean out the attic or babysitting a younger sibling. As head of household, you can decide what constitutes an atypical activity.

Take it to the next level and ask your kids to identify a need at home and how they’d like to help address or solve it, and have them negotiate a rate while they’re at it. For example, “Mom, your office is a mess. I’d like to help you organize your paperwork. I charge $5 an hour.” This teaches entrepreneurship at a young age and the importance of being your own financial advocate in the real world.

Say YES to Their Wants

Just because you say yes, doesn’t mean they will receive what they want. Instead, next time your child asks for something that isn’t necessary, ask them to jot it down and add it to their growing list of wants. Rank the wants weekly or monthly and insist that your child come up with ways to afford their wishes. Maybe it means performing more work around the house, saving up their cash gifts that year and/or watching for a sale.

When Mint spoke with Susan Beacham, founder of Money Savvy Generation, she emphasized the importance of having kids keep a list of their wants because it forces kids to stop and reflect on what they really want and value. As Susan said, “We’re teaching how our needs and wants change…We teach them how to prioritize. Children need to gauge, ‘Do I really want this? Will I really use this? If I get it, will I want it tomorrow?’”

Answer Their Awkward Money Questions

“Are we rich?” and “How much do you make?”

While your instinct may be to change the subject (or run) when these tricky money questions come out of your child’s mouth, it helps to first dig into your kid’s line of questioning.

Instead of saying, “It’s none of your business,” try responding gently with your own question like, “Why are your curious?”

You may discover that while your child ponders, “How much do you make?” his or her curiosity actually stems from overhearing a conversation about what a friend’s parent does and earns and how the family is “rich.”

It’s worth it to take a beat to learn more about the context of your child’s question. The good news is, they’re curious about money. The last thing you want to do is to shut them down. It only perpetuates the stigma around money.

Who knows, by asking your child to share more about their money question, it may lead you down an opportune path to discuss what “rich” means to your family and that while everyone makes a different amount, it’s not how much one earns that matters, but how we manage that money.

Then, you can pivot to talking about the importance of saving…and all the while you’ve avoided revealing your salary and bonus!

Don’t Delay Gratification

At least not when you’re trying to entice kids to save money.

When I chatted with Bill Dwight, founder of FamZoo, an online and mobile banking service for parents and kids, he suggested that moms and dad encourage their kids to save by offering a savings return frequently – each week, instead of each year. This way kids can feel better rewarded and more compelled to save habitually.

“Kids operate on a much faster clock. A year is a really long time to a kid,” says Dwight. FamZoo sends a text to your child each time interest accrues. “I would like my kids when they’re very young to get a text message that says, ‘Oh, you just earned $0.25 of interest this week,’ because I want to set that habit that says, ‘Yes, saving is good. My money is working for me.’ A lot of kids don’t even have that concept that money could work for you.”


Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

Save more, spend smarter, and make your money go further