8 Questions to Help Teens Avoid Impulse Spending

“That money is burning a hole in your pocket.”  This timeless phrase was uttered to me many times as I was growing up and I have found myself saying the same thing to my kids.  It is no surprise that young kids want to spend their money immediately.  To them, owning a dollar makes them rich! However, as kids get older, the amount of money that they may be handling is significantly more than just a dollar.  Monetary gifts for birthdays and holidays, paychecks from jobs and even gift cards can add up to a sizable amount of money for a teen.  Many families have their teens save a portion of their money and allow them to spend the remaining amount.

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Using Children’s Books to Teach Money Concepts

Children’s literature is a fabulous resource for teaching your child money concepts or initiating money conversations between you and your child.  In this first installment of book reviews, I will discuss two books that are favorites of mine, Double Fudge by Judy Blume and Ramona and her Father by Beverly Cleary. 

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5 Tips for Setting Up an Effective Allowance System

Photo taken by Brittany Whitlock

If asked, most parents would say that they want their children to have smart money skills.  Figuring out the best way to teach your child about money can be a bit tricky.  There are many theories of how allowance or money lessons could be structured and used within a family.  Do you give an allowance or not?  Do you tie the allowance to chores?  Do you pay for grades?

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The Beanbag Budget

I grew up in a very small town in North Carolina.  We were just your average, middle-class family of four – dad, mom, son and daughter (and a handful of assorted pets).  Economically, we were middle of the road, too.   There were plenty of families that were wealthier and plenty of families that were poorer.   As my Mom would say, “We weren't rich on money but we were rich on love.”  

One summer, we decided to have a huge yard sale.  My mom and dad sold most of our living room furniture and the plan was to use the money from the sale to go toward the purchase of a new sofa and recliner.  That was a fabulous plan – until life intervened and one of our cars broke down.  My parents had to use the furniture money to fix the car.   Suddenly, we had no furniture and no plan for getting new stuff any time soon.

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Teach Kids about Money by Letting Go of the Bike

Toy marketers do their jobs very well these days and can convince my kids that a $10 ball will bounce higher than a $2 ball or that they absolutely must have a new video game to make their life complete!  One of the challenges that I have faced over and over again as a parent is keeping my mouth shut when one of my kids buys a toy that I know will be living under the bed or in the back of the closet once the newness wears off.  That’s assuming that the toy doesn’t actually break before then.   However, I firmly believe that children need to have the opportunity to make their own decisions with their money (good or bad) when they are young and the consequences are minor.

Think of it as teaching your child to ride a bike.  You make sure they are safe by wearing a helmet and riding in a safe place.  You talk with them about how the bike works and demonstrate riding a bike for them.  You even hold on to the back of the bike for little bit to make sure they don’t get hurt.  Ultimately, though, they need to practice by themselves --- over and over to get good at riding the bike. 

We should apply the same method to teaching our kids about money.  We can talk with them about how much items cost and how to budget for items that we really want.  We let them see us using money on a daily basis, from buying groceries, paying bills or going to the movies.  We even put a few safety rules in place, such as limiting their allowance and not allowing them to buy dangerous items.   However, what I have found most difficult is “letting go of the bike” and allowing them to use their money as they wish.  It is so hard to watch them spend four weeks of allowance on a toy that you know will lose its pizazz quickly.  Yet, this is probably the most important part of the process of learning smart money management skills --- practice!  It is better to let them make spending mistakes now, when the consequences are small, instead of when they get their first credit card.  

There will be times when they make good choices with their money and there will be times when they become disappointed with their decision.  They can learn from both experiences.  

What do you think is the most difficult part of teaching money management skills to your child?


-Pam

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Pop Quiz! Money Advice from the Kids

Frank and I try to include our kids in money discussions.  It can be as simple as which cereal to choose in the store and as difficult as explaining why it is not feasible to pay $3000 for a school trip (seriously!).  All in all, I think my kids are fairly responsible money managers for their different ages.  Last night, the curious teacher in me came out and I decided to give them a surprise quiz!  So after dinner, when each kid had gone off to do their own thing, I decided to talk with each one individually.  I asked them each the same question, “If you had a friend who just started getting an allowance (or paycheck), what advice would you give them about having their own money?”

Advice from the Seven Year Old:

I started with my seven year old who was busy looking for a toy under his bed.  His response, without even looking at me, was “Keep your allowance until you can get something that you really want.”  Plain and simple.  I thought that was pretty darn good for a seven year old.  

Lesson one:  Save your money until you have enough to pay for the things you want to buy.  

Advice from the 14 Year Old:

Feeling rather pleased with my idea for a pop quiz, I next wandered into my 14 year old’s room and asked him the same question.  He thought for a brief moment and then said, “Don’t blow it on something in the store just because it looks cool.  Like when I spent $40 on the new video game and it really wasn’t that fun.”  Awesome!   Lesson Two:  Have a plan for your money.  Don’t give in to impulse purchases!

Advice from the 17 Year Old:

At this point, I was two for two!  Feeling really confident, I went downstairs to my daughter’s room.  She is 17 years old and was working on a research paper.  I assured her that this wouldn’t take very long and asked her the same question.  I wish I had a picture to show you the look on her face.  It was a combination of “Really?” and “What in the world is my mother up to now?”  After a pause, she said, “Don’t spend it all.”  So she lost a few points on style, but gets extra credit for a good answer.  Lesson Three:  Always have some money put away.  SAVE!

And finally, Advice from the 10 Year Old:

I go back upstairs to find my 10 year old son.  Just so you know a bit about him, he came into this world under his own terms and is still marching to his own beat!  He is our little, laid back comedian.  He was petting our goofy dog, Rascal, when I asked him the money question.  With a twinkle in his eye, he replied, “Don’t give it to the dog.”  After I finished laughing, I asked him what he meant and he explained that if you give your money to the dog, the dog will eat it and you will be left with nothing.  In a crazy, silly way, it made sense to me!  Lesson Four:  Invest wisely --- because it’s a dog eat dog world out there!  (Sorry, couldn’t resist the dog humor!)

Photo taken by Pam Whitlock

-Pam

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Welcome to the MoneyTrail Blog!

So…I have been saying for a few months that I wanted a blog to go along with our MoneyTrail website.   I have been writing down ideas every time the light bulb goes off and we finally got the design finished for the blog today!  The kids are in bed, the dishes are done and I am ready to write my very first entry.  Guess what?  I don’t know what to write!  And…I am choosing to ignore the grin on my husband’s face at the moment.

Let’s just start with the basics.  My name is Pam.   My husband and I are the creators and owners of MoneyTrail, an allowance and money management website for teens and families.  We have four great kids, one girl and three boys.  Their ages range from 7 – 17.  To round out our crazy household, we have a 55 lb. Wheaten Terrier named Rascal.  Believe me, he lives up to his name. 

I have been a stay at home mom for 14 years (wow, just saying that makes me feel kinda old!) and was an elementary school teacher and day care director before that.  My husband, Frank, is a computer programmer and has been working in the software industry for 20 years.   One of the parenting challenges that we have encountered over the years has been keeping track of allowances and IOUs.   We also want our children to have smart money skills and eventually grow into financially responsible adults.  The creation of MoneyTrail has been a fun combination of our strengths and our goals for our kids.  I am hoping that this blog becomes an extension of MoneyTrail and adds our voice, and yours, to the financial literacy community.

When I think about what I want this blog to convey, the first thing that pops to my mind is to make this a fun, informative place for parents to read and chat about kids and money --- how to help our kids learn the value of a dollar, new ideas for activities or systems to try with your family, current news about financial literacy and simple observations from this Mom’s perspective.  I hope you will comment on the entries and help me create a great conversation.

Thanks for joining me on this adventure!  Please comment and let me know a little about yourself.


-Pam

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