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Why We Teach Kids About Money: Part One

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Why we want to teach kids about money

We’ve been at this now — writing, blogging, public speaking – for nearly two years.  I’ll be honest: it hasn’t been easy – but it’s been a great adventure.  Why am I having so much fun?  To understand that, you have to know more about why we’re doing this.

Jimmy goes to the movies.  To get into the movie, he will need a ticket, which costs $5.50.  He’d also like to buy a soda for $3.00, popcorn for $4.75 and candy for $2.50.  How much money will he need? How much change will he get back if he pays with a twenty-dollar bill?

Thus is the extent of most kids’ financial education.   This is what the schools are doing for our kids.  At the same time kids are learning these money lessons in school, they’re learning – from TV, games, friends – how to “get ahead” in a consumer-driven society.  They’re learning that the importance of having the right stuff, right now.  They’re not learning how to think about value, or budgeting, or the true cost of debt.

Stuff.  Now.  This is what your kids learn, you take the time to teach them differently.

We stumbled into this.  We didn’t go in hoping we were going to change the world, or planning to write a book, or even wind up on anyone’s radar.  We were just trying to steer our three children onto a better course.  We wanted to help them avoid making the same mistakes we’d made.

So we put the kids on an allowance

Years ago, when our kids were 7 and 8 years old and they told people they received over $100 a month for their allowance, you can bet that we got a lot of questions and comments:

Must be nice to have so much money to throw around!

Why on earth would kids that age need so much money?

What were we thinking?

Our attempts to explain our reasoning often fell on deaf ears by people who walked away shaking their heads.  It’s not that we went around announcing our allowance plan to everyone, but with family, word has a way of getting around…

We have always done things a little differently.  Not always with any particular plan in mind, but because it just felt like the right thing to do at the time.  A lot of it started with Tracie’s experience in being a coach with Parenting With Love and Logic – it taught us to give our kids the opportunity to experience the consequences of their behaviors, instead of setting up elaborate systems of rules for them.  We also learned the value of just spending time together, and of being present for each other.  We reserved TV and video game time for certain blocks of time, not “whenever I’m bored.”  This, too, had positive consequences we didn’t anticipate:  When our kids were little, they didn’t obsess over getting all of the right stuff for at Christmas — they didn’t whine about this stuff because they weren’t being bombarded with it on TV.

So why are we doing this?  We’ve come to realize, now that our kids are older teens, that we have some pretty amazing kids.  They’re not better than their peers, they just have a different perspective when it comes to money.  We’re not any better than our peers who are parents, we just have a different perspective on teaching kids about money.  We made a LOT of mistakes along the way – buy we wrote down what worked, and then focused on the successes with our kids.

Where are we headed?

I sleep well at night confident that my kids are going to make wise decisions about money in their teens, and in their adult lives.  They aren’t gong to fall into the debt trap.  If we, as a country, are ever going to move forward to having a balanced budget, eliminating our debt, and lead the world in economic opportunity, it’s going to take more than my three kids understanding how to manage their finances.  It’s going to take yours, too.

That’s why we’re doing this.  We want you on our side.  All of us, and our kids – we can do this, but we have to do it together.

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  • One of my favorite writers and commentators wrote the perfect companion piece to this today. Or maybe it’s a preface — I can never decide if he’s my muse, or if I’m his student — and, as usual, he writes it so much better than I ever could.

    Karl Denninger, over at The Market Ticker, describes “Actually Fixing Our Economy” http://market-ticker.org/akcs-www?singlepost=3353433

    Karl correctly identifies, I believe, the only way to rescue the American economy, and the only way for our kids to avoid financial ruin:

    Stop.

    Buying.

    Things.

    On.

    Credit.

    Period.