Do you want your children to understand what thrift is, evaluate trade-offs in their decision-making, practice gratitude, and grapple with the idea of <gasp!> “enough”? You might want to pick up The Opposite of Spoiled.
The subtitle of the book is actually “Raising Kids Who Are Grounded, Generous, and Smart About Money.” A more informative subtitle than mine, but mine’s probably a more accurate representation of how we parents think about it. Plus, gratuitous ‘80s throwback!
The Basics of Raising Money-Savvy Children
The book is broken into chapters by money topic: Allowance, Spending, Giving, etc. There are some fascinating, engaging fact, anecdotes, and ideas in each chapter. More important are some overarching rules that apply no matter what money topic is at hand. And, surprise! They have a lot in common with what Essentialism says, and a lot in common with how I think good financial planning is done. Which is to say, it requires thought and intention.
Rule 1. Think. How do you (and your co-parent) think money is best handled? Vis-a-vis charity, chores, jobs, allowances, saving, spending, the whole ball of wax. How do your money choices reflect your lifestyle realities and your values? I’m a big fan of mindmapping in my financial planning practice: a low-stress, free-form, but organized way to brainstorm. Try it here, either with pen and paper or in a free online tool (I use Mindmeister).
Rule 2. Discuss. When money issues come up, which they do all the time, talk about it with your child. Why do you do what you do with your money? For example, when you’re making your charitable-giving decisions, involve your children. Let them decide where a part of the money goes. There are even products that will help guide these discussions.
Rule 3. Make a plan. Be intentional. I know, it’s the drum I beat. But putting in the effort up front to create a framework of your money values and priorities means you only have to figure it out once (with, of course, an occasional reevaluation), not every time a financial decision arises.
Rule 4. Start early. You think you’re teaching your kids money lessons too young? Think again. The book talks about starting at age 3. As the book points out time and again (and as all of us with children have learned), children understand more at an earlier age than we ever expect. If we don’t tell them what we’re thinking, where else will they get their money messages?
These Are a Few of My Favorite Ideas
There are approximately a million intriguing ideas in this book. Here are some of my favorites. (Note: I’m leaving out the idea of selling your house, buying one at half the price, and donating the difference. See, I can be reasonable.)
Kids get an allowance each week, no questions asked. They divide it among Give, Spend, and Save buckets. This gives them a regular opportunity to practice handling income, delaying gratification, choosing how much to spend now, and thinking about helping the less fortunate.
I do this with my older daughter. I also ask her to explain why she’s dividing it up as she does; I think (hope?) this will encourage her to be intentional about what she does with each dollar. Eventually. After many many years.
Give your kids chores. They don’t get rewarded for this. This is their contribution to the household, just like their parents contribute (endlessly) for no pay.
When kids get a little older, allowance might morph into a debit card, and the kid is expected to purchase some necessities. Why? “The combination of a strictly finite resource and control forces the child to think about trade-offs and value.”
I knew (and admired) a family with 3 older girls back in Virginia. The mom gave them each $150 each quarter to buy all their clothes. They could buy one really nice (or at least expensive) pair of jeans, but would have to wear them with old socks and underwear. Or they could buy cheaper jeans, maybe shop at a consignment store, and take home a bigger haul. It was up to the child to figure this out for herself…and make the mistakes along the way.
This approach can simultaneously make finances easier for the parent (all the decision making is on the kid’s shoulders!), force the child to think about what they personally value, and instill in the kid some pride that they’re the masters of their own (sartorial) destiny.
When figuring out where your child is going to donate the “Give” part of her allowance or her portion of the family’s charitable donations, stay local. Remote charities might be “better” by some measure, but being able to visit the charity, see what they do, and have someone thank your child personally for the contribution…that’s a powerful lesson.
Which reminded me of another money teaching tool: if you want to teach your kids about investing, give them stock in a company. The Oblivious Investor promotes this idea here. (This is one use for a few shares of your company stock if you have too much of it, as I described in previous blog post.)
They can learn a bit about company finances, the relationship between company performance and stock performance, what dividends are, how useful predictions of stock or company performance are (or aren’t). It’ll be more of a game, and therefore your child is more likely to stick with it…and learn from it.
When the goal is having a portfolio that best supports your overall financial plan, I believe that mutual funds are generally better than individual stocks. But if the goal is educating and getting your kid interested in investing, company stock is the winner.
Instead of giving each other stuff that we don’t need (and in some cases don’t even want), give each other “custom coupons.” Your child could give you an “I’ll mow the lawn” coupon. You could give him a “I’ll drop everything and play with you now” coupon. This encourages your child to give you something that you really want, to be creative, and to realize that value doesn’t have to involve money. (And the same might be said of you.)
Limitations of the Book
- There is an admitted wealthy bias in the book. My favorite anecdote to illustrate this was about a woman who was an immigrant, living with her children and her mother in a one-bedroom apartment. When presented with the idea of an allowance not tied to chores, the woman was aghast. She couldn’t comprehend just giving her children money. She had worked for every cent she’d ever had, and so would they, by gum.
- The amount of advice can be overwhelming. So many of these ideas sounded great to me. But I can’t possibly do all of them! Then I realized this fit in perfectly with the philosophy of “Essentialism,” as reviewed last month on my blog. Pick the one or two ideas that align best with your values and goals…and the rest is just a fun read.
- If you’re not already actively teaching your kids about money, be prepared to feel like crap about it. Just a hazard of reading any parenting book, really.
- The guy clearly has ideas about how parenting should be done in general. These might distract from the real point of the book: raising money-savvy kids. But, as my wise sister-in-law has told me, pick out the bits that seem right and useful to you, and leave the rest.
- There’s a weeeee bit of “In ye olden days, things were better…”
The book mentions these other resources:
- Share Save Spend. An organization whose mission is “help individuals and families develop healthy money habits that honor their values and enhance their financial wellbeing.” The blog looks like it might have great regular reminders of how to keep our money aligned with our values.
- Longing and Belonging. A book that tries to answer the question, “Why do children seem to desire so much, so often, so soon, and why do parents capitulate so readily?”
Do you want to get your Money House in order before you start preaching to the kids? Or do you want to involve your children in your efforts to organize and improve your finances? Reach out to me at firstname.lastname@example.org or schedule a free 30-minute consultation.
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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner and/or an accountant for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.