“Children are sponges – they are going to absorb whatever is around them, so we need to be intentional about what surrounds them.” – Dave Ramsey, Smart Money Smart Kids
How can I instill strong values regarding life and money into my children?
Every so often, I revisit this piece after releasing it first when Baylor was 10 months old. Baylor is starting Kindergarten, Collins is almost 4, and our youngest, Sutton, will be 2 in December.
While they are still young, they’ve already begun grasping the actions and values I visibly demonstrate.
As a small example, I heard Baylor say to Collins one day, “I’ll give you $1 for the strawberry pouch!” I had to make sure this transaction was brokered appropriately…
Smart Money Smart Kids, by Dave Ramsey & Rachel Cruze (Dave’s daughter), mentions many things that our children learn are caught as opposed to taught.
Here are a few takeaways I found insightful from Smart Money Smart Kids:
Spend, Save, and Give. For what does a child really need money? A toy now, a toy tomorrow, and giving to faith or charity.
At ages 13 to 18, this changes with cars and college entering the picture, but most of what children spend their money on falls into these three categories. Determine what percentages or amounts work for your family. If your child receives $5 a week, maybe $3 is for spending, $1 for saving, and $1 for giving.
Brian has used Money Savvy Kids with his kids. They have a terrific visual resource, a see-through piggy bank with these three categories, as well as an investing category.
Commission and not Allowance. Commission allows children of any age to receive weekly gratification for their work, as well as learning the value and effort of working to earn money.
It’s important to note that you do not need to break the bank. Kids’ faces light up when receiving any amount of physical money, mainly coins! Incorporating that feeling into completing tasks like picking up toys, making their bed, emptying trash cans, and setting the dinner table is a meaningful connection. This money is THEIRS to do with as they wish, after falling within the parameters of Spend, Save, and Give.
As children age, tasks can become more difficult, including feeding pets, vacuuming, doing laundry, washing dishes, watering plants, yardwork, or house cleaning. Spending their own money at a store will make the toy even more valuable to them. Giving their own money at church or to someone in need will show them the sincerity and meaning of a giving heart.
The Car. Brian speaks from experience here — 4 kids! Anything can happen to their first vehicle. Having “skin in the game” affects the value of an object or task at hand. If your child has skin in the game, there is a good chance they will take better care of their first car.
My personal skin in the game was physical labor. My Dad had a 1982 Jeep CJ8 “Scrambler.” He and I removed every part down to the frame, cleaned it up, and put it back together with some new parts and a new paint job. This was my dream first car, as well as the vehicle my Dad and I took to every ballfield growing up. Parts would break from time to time, but Dad and I always fixed the Scrambler together.
For most people, skin in the game means your child pays for certain aspects of the car:
Potentially a percentage of the purchase - if your child saves $3,000 for their first car, you then match that amount and help them buy a $6,000 car.
Maybe they contribute a third, and their first car is $9,000.
Maybe the driver pays for their own gas, maintenance, or insurance.
Used vehicles are your friend here, at 16 mistakes always happen! (I was lucky enough to have a Jeep that jumped curbs…)
As I flipped back through the pages of Smart Money Smart Kids, these few topics are just scratching the surface. The takeaways are numerous. If you have children, I would definitely suggest giving it a read.
As always, thank you for the introduction of your friends and family that so many of you have made. We are honored to serve you! As a service to our clients, we are happy to act as a sounding board for your friends and family. Your family is our family, too. If any of them should need a second opinion on their financial situation, introduce them to www.striblingwhalen.com or call us at 678-989-0048.
This content is for general educational and informational purposes only. It is not individualized investment advice or a recommendation. It does not consider any specific investor’s financial situation or objectives.