This is part one of a two-part series about teaching your children sound financial habits that will last a lifetime.
I recently read an Op-Ed column that talked about the disservice we are paying younger adults because there are no more social structures to provide clear paths for them. That troubled me. I want my kids to forge their own paths. Why do we need structures in an age where disruption is king?
I was never one to pump my kids with praise about how talented they were and how their future was limitless. Sure, I was positive and supportive, but I was also honest. If they played or performed poorly, I said so. I let them know that all of it was a learning experience and a chance to do better. Sometimes you bomb tests and sometimes you have a bad game. What matters is getting back up when you’re knocked down.
I have four boys and have always been forthright with them. Like everyone else, each of the boys have strengths and weaknesses. While I love them dearly and cherish my time with them, it was a monumental undertaking when I set out to teach them about work and money. How do you teach kids, who seemingly have everything they need, about money and work?
The formative years
I was really fortunate that my wife taught kindergarten for years and she set guidelines and age-appropriate expectations. She absolutely crushed my boys’ formative earlier years, which set the table for me to step up to teach them the value of a dollar and hard work.
I think kids need to do work. At age 3 you make your bed and clean up your toys; at age 5 you can feed the dog and take out the garbage. I know it’s somewhat impractical to get a regular job when they get older and are playing sports or have enrichment camps and trips that fill up calendars, but I believe there is real value in getting yelled at by an insensitive and unprofessional manager. Having a schedule is good, but getting your hands dirty and solving problems is important too.
When the boys were in junior high, I helped them to start a lawn cutting business. We bought a mower, trimmer and leaf blower, I figured we needed those things around the house anyway, and off they went to secure some neighborhood customers.
Manual labor has the ability to reveal strengths and weaknesses. They worked the neighborhood and at one time they had over a dozen customers. Not the largest scale business ever, but they made more than $200 per week from May to October. That’s a lot of money for kids who have no expenses. Dad started as quality control but as seasons went buy the older boys helped the younger ones get the job done. Two of the boys took great pride in their work when the spirit moved them and made sure every blade of grass was manicured. Two considered it a grind and just did it. None liked the billing aspect of the business and only one was willing to go knock on doors and collect.
The ah-ha moment
A good friend gave me some advice on teaching kids the value of money. While each of his kids worked at various jobs, babysitting, lawn care, etc., his arrangement was that whatever they saved for the year – he matched it. Not everyone is in a position to do this, but the idea is to give them a motivation to embrace saving.
For my boys, who had accumulated some money with their lawn service, there were some sizeable checks we wrote at the end of each year. My thinking: It was money they would need for college and we would no doubt have given it to them anyway.
And then there was the ‘Ah-Ha’ (holy anthem of angels singing) moment when we were on vacation and my oldest son wanted an extra souvenir. We had already bought each of them one thing and we told him if he wanted another item he needed to pay for it. It was a $20 hat. He certainly could afford it.
He paused for a moment and said, “if you pay for the hat it only costs you $20, but if I paid for it, it will cost me $40.” The clouds parted and the sun shined through. He’d taken into account that his $20 wouldn’t go into savings and would not be matched at the end of the year. That’s real progress. And he didn’t buy the hat.
Patience pays off
My kids do understand that it is important to save. Two of the boys are tightfisted and rarely buy a thing, the other two are a bit more loose spending their money. You cannot make them be something they are not, but what I find most satisfying is my belief that they really do get it. They all understand that you need to make it before you can save it, and you need to start putting money away as soon as you can. Getting in the habit of contributing to a regular savings plan is probably the best habit you can form.
I simply provided my kids with the facts, gave them the tools to save and tried to instill a work ethic from early on. Some say it’s hard. I’d say nothing really worth doing is ever easy, but when it’s your kids – you tend to have high hopes and a lot of patience.