Let's Talk about Money! 4 Tips for Starting the Conversation with Your Child

Image via paulhami on flikr

Would you ever hand your car keys to a teen that has never driven?  Would you hand a book to a 4 year old child and expect her to learn to read it by herself?  I am guessing that most folks would answer "No" to both of those questions.  When teaching a child or a teen new skills, there has to be some parental interaction and guidelines.

The same thing applies to teaching a child or teen about money management.  If you just hand your child a wad of money, they will learn very little about responsible money management.  There has to be ongoing conversations and consistent guidelines (regardless of whether your child gets an allowance or not) in order for your child to become financially literate.  I was thrilled to find two articles recently that covered this topic.

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What Can Shopping for Kid's Clothes Teach about Financial Literacy?

Twice in the past week I have noticed that my kids are once again out-growing their clothes.  My youngest child put on a pair of pajama pants that fit him last winter and now they look like Capri pants.  And then…one of my older boys reminded me that he needs new dress shoes.  I was a bit skeptical, until I realized that his current shoes were two sizes too small.  It’s kind of hard to argue with that.  It looks like we will be doing some shopping this weekend.

Shopping for kids clothes doesn’t have to be a budget buster.  In fact, there can be opportunities for your child or teen to learn and practice responsible financial management skills.

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Toys Sales and the Recession

By Photos8.org

Recession.  Foreclosure.  Bankrupty.  Debt.  The past few years have been full of stories about the harsh realities of the economy.  I read post after post each week from folks who are budgeting everyday to reduce their debt and improve their economic status.  Imagine my surprise last week when I ran across an article by Jason at Frugal Dad.com in which he shares statistics about the toy industry in the United States.  It seems that the toy sales in the US have risen during the recession.

Take a look at this graphic image below that Jason put together.  Some of the stats are amazing.  The most intriguing to me are:

• Less than 4% of the world's children live in the United States but we buy more than 40% of the toys.
• The amount of money spent per child on toys in the United States is $280 per year.
• Toy sales have increased by 2% during the recession while the amount spent in supermarkets has decreased by .5%.

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Gift Card Management for Kids & Teens

Kids & teens learn to manage gift cards

My kids really like getting a few gift cards for presents.   My younger kids view them as a “free” shopping trip and enjoy getting to use a plastic card like the grown-ups.  My teens like gift cards because they are just darn picky when it comes to gifts and would often prefer to pick out their own stuff.    Whether or not you like gift cards, the reality is that at some point your kids will have them and will need to learn to manage them appropriately.  With four kids in our house, gift card management can occasionally get challenging.    (Several of these obstacles prompted us to add a gift card tracking feature to MoneyTrail.)

Here are some of our common obstacles and the solutions we have developed over the last few years.

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Mom, Can You Buy Me a New Saxophone?

I am a big believer in using everyday moments with our kids to teach them the basic concepts of financial literacy and money management.  Making the connection between familiar events and abstract concepts creates a more meaningful, relevant understanding.  I was lucky enough to have one of these moments recently with my 11 year old.

During the first week of middle school, he came home and announced that he wanted to play the tenor saxophone.  Then he proceeds to ask if we would buy him one.   (Important background info:   we bought him a good quality, used Alto Sax two years ago.  He really enjoys playing it, practices on his own and is in the school band this year.)   He just wanted to try something new and didn’t consider the financial aspect of his request to buy another saxophone.   He and I talked about the options:

1. We could spend a few thousand dollars and buy him a new Tenor Sax.  This wasn't going to happen.
2. We could spend $300 - $400 to rent a Tenor Sax for the school year.  I felt this was a bit much for a spur of the moment request.
3. We could say "No."  Initially, I did say "No".  However, after about a week, he was still asking about this instrument.  Perhaps this wasn't a passing fad or an instant gratification moment. 

So...

     4.  We looked into other options.  I knew from prior experience that occasionally, the school will own instruments that are available for the use of the students.  I emailed the band director and learned that there was indeed a tenor sax available.  We could rent it for the entire school year for $25.  

This final option fit within our existing band budget for the year and was able to allow our son to try out a new activity.  Most importantly, he was able to be involved in a financial planning process that was meaningful and relevant to him.    Time will only tell whether the Tenor Sax holds his interest.  For the moment, we are all happy with the decision that was made.  And...I haven't even needed to buy ear plugs!

 

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Footballs & Helicopters: How to Avoid Shopping Meltdowns with your Kids

It has happened to most parents at one time or another.  You are in a department store with your kids and one of them sees “the toy” and simply must have it.

     “Can I get it?”

     “But Mama….I really want it.” 

     “I won’t ask for anything else.”

     “I promise I will do my chores.” 

     “Please, ple-e-e-e-e-e-ease.” 

      “I’ve wanted this my whole life.” 

For such a little person, they sure can have a loud voice, especially when you are in a store and feel  the eyes of all the other shoppers nearby glaring at you!  At this point, you have three options: 

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