The Berenstain Bears' Trouble With Money: "When little bears spend every nickel and penny, the trouble with money is — they never have any!"
That quotation picks us up where we left off in November, thinking about kids, chores and money. I asked you to send me your thoughts, and many did, offering some that were downright inspiring with all being helpful. If anything, I have been reminded that rarely does anything good happen without thought and effort. Teaching a child is no exception.
Where does teaching kids about money start?
As Knight A. Kiplinger, leader of the Kiplinger financial media company, wrote, "Here's a scary thought: Children's handling of money is learned more from their parents' behavior than from their parents' advice."
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If anything, kids are perceptive. If you don't believe me, yell out a curse word when you stub your toe and see what your 2-year old starts saying immediately. Kids learn what we show them, and that includes how we interact with money.
We must be good role models, and being a good role model is more than demonstrating good money management habits.
Personal finance writer Suze Orman noted in How to Teach Your Kids About Money that many parents think "showering their kids with everything is good parenting."
"Then when that kid is out in the real world on a low starting salary, she has no sense at all of financial restraint and thinks she still has to have everything," Orman said.
In short, "spoiling" little Johnny gets you a bad result.
But where do we go from there? If I had to boil down everything, it is that kids need to work, earn and have responsibility over money.
Reader Nancy Dicken contributed perhaps the most encompassing system. She started her three kids — ages 7, 9 and 13 — on a comprehensive budget and chore system. With each child's input, a list of likely needs for the coming year, such as clothing, school lunches, haircuts, summer camps, etc., was put together.
As Nancy wrote, "It looked like a lot of money, but there was nothing in their budgets that we would not have agreed to during the year."
Along with this "master" budget, Nancy and her children similarly developed a master chore list in which each child had a set of activities that needed to be completed daily or weekly.
After putting the budgets and chore lists together, Nancy added in a couple of dollars every week as an "allowance," divided each kid's yearly budget by 12, and had that amount of money deposited in each child's bank account at the start of the month.
From that point, the kids were in charge. If they wanted a new shirt or to play league baseball, the money had to come from their accounts.
Nancy wrote that it did not take long for them to figure out how to build their accounts — choosing to take their lunch from home rather than buying a school lunch, or taking on outside jobs to earn extra money.
Reader Holly Arnold offered a similar plan. Her children have a set allowance deposited in their accounts each Monday that covers all entertainment, clothing, going out, etc. Each child also has a set of required chores. For chores beyond what is required, her children may earn extra income.
Holly also made the excellent point that the most important job for a child is to be a good student, to which Professor Perry here fully agrees.
Reader Katie Reiss suggested Dave Ramsey's "Financial Peace Jr." program. Ramsey's system is similar to what Nancy and Holly suggest with the core ideas of giving children responsibility over earning and shepherding money. Ramsey also adds his trademark "no debt" theme and explicitly incorporates a "giving" element — something that readers Walter and Michelle Goedeke commented they felt was vital for children to "remind them that there are always those less fortunate in need."
A nagging question is what age to start kids on some plan? Obviously age matters, but kids see and interact with money at an early age.
Prominent author Janet Bodnar wrote in Raising Money Smart Kids that the right time to talk about money is "at whatever age an ordinary little child starts showing an interest in, and asking questions about, money."
Joline Godfrey in Raising Financially Fit Kids suggests that age 5 is a general answer.
What's crucial is to keep things age- appropriate — chores, responsibility and amounts of money.
As for examples of work kids can do, the reality is that for young kids, earning opportunities are primarily in the home. Here are several to consider: Taking care of pets, sweeping, mopping, vacuuming, doing laundry, lawn care, taking out garbage, grocery shopping, putting away groceries, cleaning bathrooms, ironing, detailing cars, doing dishes, cleaning the kitchen, bringing in firewood, taking care of younger siblings, bringing in the newspaper, keeping their rooms tidy, and changing sheets on the beds.
Anything that makes a house run is fair game to me. Again, age-appropriate is the idea. And while my 6-year-old might not make his bed as well as I do, that is not the point. The point is work and responsibility.
The stripped-down story seems simple: Kids need to have age-appropriate responsibility over money (an amount that cannot buy everything they want immediately), a way to earn money and a set of chores required for being part of a family.
The details may vary.
For further reading, I would suggest Clark Howard's Clark Smart Parents, Clark Smart Kids, Ramsey's Financial Peace Jr., and Bodnar's Raising Money Smart Kids.
And, of course, I also think every parent with young kids should include The Berenstain Bears Get the Gimmies and The Berenstain Bears' Trouble With Money as bedtime stories.