Experiential Learning for Parents

Parenting is an art as much as a science.  What nurtures creativity and responsibility in one child may breed wanton disregard in another.  What is a great instructional tool one day is seen as useless and starts an argument the next.  And while there are many helpful and well documented methodologies for parenting, the best informed parent will make some mistakes – and learn from them.  As someone who has literally written the book on teaching kids about money (The Ultimate Parenting Map for Money Smart Kids – $10 including free shipping at www.brightleitz.com), I continue to learn from mistakes when I put theory into practice. 

One of the hard learned lessons for me as a parent is that every stage of life for kids brings new lessons for the children and for their parents.  The child who saved all her allowance as a grade schooler may have spent all her pay check within three days of every pay day as a teenager.  What can be learned from this is that phases in kids’ lives are temporary.  The outlook of the grade schooler isn’t lost, it’s just on vacation.  And the teenager will learn to pace her spending if her parents resist the temptation to either lecture her about budgeting or give her extra money.

Another lesson is that most operating procedures work best when well defined. Here’s an example.  This summer my family had multiple teenage drivers as well as my husband and me sharing cars.  In the past we pretty much had a one-driver-per-car ratio, so the rule had been that each teen driver paid for their own gas.  As we started playing musical chairs with car usage, I decided to generously allow the kids to use our gas card.  We had them pay for a few more things we generally pay for.  Feeling particularly kind, I’d often encourage the kids to get a soda at the gas station store. Hey, it’s summer!  Live it up! 

Then the gas card bill came in.  OMG!  The bill for the first month of summer was literally over four times the size of our average bill for that card.  None of the kids was around when I opened the bill, so no shouting or bloodshed ensued.  But the system changed immediately.  Of course, it wasn’t entirely their fault.  My card, my decision.  So defining things up front – and thinking through potential outcomes – can make for less painful learning for everyone.

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Putting Your Money Where Your Mouth Is

People who have a passion manifest it in how they live their lives.  This manifestation often comes in the form of deeds rather than words.

 

An example is Scott Staub.  I don’t really know Scott – just sat next to him on a plane.  But we chatted during our flight and got to talking about what we both do for a living.  Scott is Vice President of Fund Development for EMQ Children & Family Services.  His employer advocates for children to put them with good families and reunite them with their own families when practical.  It’s hard not to be impressed that someone derives their livelihood from such work.  When we chatted, we got to talking about kids and money.  Scott doesn’t have kids, but he’s active as an uncle as well as with the son of a single mom who’s a friend of his.  It’s clear that he’s a wonderful role model for these kids.  When a nephew turned 14 recently, Scott’s gift was a promise of money to the nephew as well as a donation to a charity of the nephew’s choosing on the nephew’s behalf.  And the nephew would receive his share of the money after he’d identified his charity and discussed it with his Uncle Scott. 

 

So here’s a man who’s part of a positive financial force through his career for many more kids than most of us parents are ever able to touch.  His work will have a huge impact on the lives of kids who desperately need it.  Outside work, the kids he has a personal relationship with can see the value of working in a profession that makes a difference in people’s lives and they get experience in how to make a difference for others in the world who need it.  In my chat with him, he wasn’t boastful about his life or critical of how other people live their lives.  He’s just doing what he feels led to do. 

 

If you were gone from this earth tomorrow and someone who didn’t know you was settling your financial affairs, what would they be able to see about what’s important to you?  Would they see someone who loved to eat out, had a great wine collection, and went on some fabulous trips?  Or would they see someone who supported those in need and made a positive difference in the world?  What would those who knew you tell others?  Would they comment on how big your house was and tell stories about the business adversaries you brought to their knees?  Or would they tell how you were the first person to motivate them to research a non-profit so you could make a donation? 

Part of the Whole Package

Teaching kids about money is only one element of parenting.  But it’s part of a whole package.  Everyone – including parents and including kids – is going to have strengths and weaknesses.  We all grow as individuals if we can build on our strengths and do our best to mitigate our weaknesses.  Child need parenting that helps them do this. 

 

So if your child is doing well with managing the budget you give her for auto fuel, but she’s flunking algebra, make sure all the parenting pieces are fitting together well.  Do you need an algebra tutor or just the motivation for studying is in place?  Financial lessons needs to make logical sense.  For instance, parents need to be careful about “paying” for grades.  It might send the message that academic achievement will automatically bring financial rewards.  As any public school teacher who had a brilliant academic career can tell you, that’s not necessarily the case.  And yet a teenager’s primary job is generally agreed to be to get an education and find out enough about what her passion in life is to build a career.  So if working hard enough on grades is worthy of some financial support from parents, that’s worthwhile. 

 

As a parent of three teenagers, every once in a while I have to take a couple of steps back and ask myself, “Is it realistic that this child of mine who’s making me crazy right now should get a clothing allowance?”  If all the pieces aren’t fitting together for comprehensive responsible parenting, reassess.  And when you do reassess, remember that parenting isn’t about making your kids into clones of you.  It’s about helping them find who they are and maximize their sense of responsibility. 

When to Start Allowance

Parents want to know when the right time is to pay allowance.  It’s sort of like knowing when the right time is to get married or have kids.  It depends on the family and on the individual kids. 

 

For most kids, when they are aware that things cost money, they’re ready to have some money of their own.  And the right amount is usually about a dollar per week per year of age.  So a five year old could have as much as $5 per week.  The next step is crucial!  Don’t buy the child all of the discretionary purchases you have in the past.  It’s up to her to buy those things.  And define what it’s ok and not ok to buy.  So if she can buy candy, small toys, and stickers, tell her so.  If she’s not allowed to buy a puppy or a pocket knife, tell her that.  Leave the lines of communication open so she can ask if something is an approved purchase.  Don’t bail her out and don’t reimburse her for inappropriate purchases.  So if she buys a cheap little toy and it breaks within the week, don’t give her back the money.  If it’s truly faulty, you can take her to the store and help her get a refund, but you shouldn’t be “the store”.  If she buys a switchblade (not an approved purchase), her choices are to see if the store will take the item back and give her a refund, or you take the item and she doesn’t get a refund. 

 

For families that are struggling to make ends meet, giving money to the kids should be a rare or nonexistent occasion.  But the kids can still be learning about financial responsibility.  One way is to discuss some of the family finances.  For instance, if the grocery budget is on the agenda, have the kids help plan meals around coupons or sales in neighborhood grocery stores.  One way to let kids have a little money of their own in a sight family budget is to tell them they can have a portion of money they “find” for the family.  So if your teenager finds a way to save on the electric or water bill, he gets a quarter of that money back the first month the savings hit.  Your family still comes out ahead, he’s more financially aware, and he gets some money to spend as he wants – within what you allow.

 

Keep dialog open.  Let them talk about their money with you.  Be willing to talk with them about some of your financial situation.  It’s important to remember that there’s a difference between talking about money and lecturing or criticizing. 

 

Kids will make some mistakes with their money.  But it’s easier for them to learn from those mistakes now – while you’re feeding, clothing, and housing them – than when they’re on their own. 

 

There’s lots more on this issue and others to teach kids finance in The Ultimate Parenting Map to Money Smart Kids available at www.brightleitz.com . 

5 Tips for Raising Money Smart Kids

  1. Remember that experience is better than lecturing.  When your kids are ready to learn about money, start letting them make some financial decisions.  It might be as basic as choosing between an ice cream treat and a soda, but let them decide and let them know it’s about deciding what to get, not getting everything they want.
  2. Start younger than you think you should.  Many kids in pre-school can make the ice cream vs soda decision.  Elementary school kids can have an allowance that let’s them buy some things that you used to buy for them.  In late middle school kids can start managing a budget to buy their own clothes.
  3. Lay out boundaries up front.  Let them know what they are not allowed to buy – clothes displaying profanity, dangerous objects like knives, whatever you decide is inappropriate for your family and their age.  Let them know they’re welcome to check with you if they wonder if a purchase is acceptable.  And let them know that if they buy something they shouldn’t, they either have to return the purchase for a refund or give the poor purchase to you for no refund.
  4. Let them be themselves.  They might spend money on things you would never want, but it’s what they want and let’s them start developing their own money personality and skills. 
  5. No bailouts!  If kids make bad choices, express your compassion for the error, ask how they might handle the situation differently in the future, and let them deal with the outcome.  Don’t give them money to recover their loss.  We all learn from our mistakes.  And if you bailout your kids from their financial mishaps, they learn that mistakes aren’t a problem, because you’ll always rescue them.  That’s a very expensive life lesson for them and for you. 

The Money Pet

We’ve all heard about a house or other project that’s a major “money pit”.  While not as widely recognized, there are also “money pets”.  If you’re a Pet Person, you’ve probably had at least one in your life.  It’s the stray that never leaves and becomes a part of the family, developing health problems that are quite expensive to treat.  Or is perfectly healthy, but a picky eater who’ll only eat the pet equivalent of filet mignon.  Let’s put things in perspective.

As a Pet Person, I’m not suggesting that you have Fido put to sleep the minute he gets injured.  But we need to be realistic about the finances of pet ownership just like we are the rest of the family financial commitments and this often gets very emotional input from the kids.  Here are some ideas to exhibit sanity without being on the SPCA watch list.

         Everyone can be picky about what they eat, but we all need to eat a diet that fits our pocketbook.  It’s fine to get a few pricey treats for your pet, but if your expensive food treats are only occasional, the pets should eat a reasonably priced stable diet. 

         If every cute pet toy ends up in your shopping cart when the kids are along, tell them they can buy those items with their money if they wish, but otherwise the pet gets basic needs met.

         Don’t get a pet unless you can afford one.  Even if you’re trying to save the life of a stray, taking it in while you put an ad in the paper to find the animal a good home can be less expensive than keeping it long term.  Also, many local animal shelters have “foster pet” programs where the shelter will provide food to families who keep animals until they can be placed.

Depleting your financial resources for a choice you can’t afford is never good for you or your family.  Only bring a pet to your home after considering all the costs, including vet bills, food, and potential damage to your home.

Holiday Financial Lessons for Kids

Too often the holidays are the time of year when any hope of financial discipline flies out the window.  You can change that and actually turn it into a teaching opportunity for you and your kids.  Here are a few tips.

Don’t let the kids expect to get everything they want.  Let them make a list and let them know they may get items on the list, but not everything there. 

When the kids are old enough, you can tell them what the gift budget is for them.  “Old enough” usually means that they know that Mom and Dad – not some mythical being – is the one who actually goes to the store, stands in line, and pulls out the checkbook at the register. 

Don’t forget those who are in need.  Kids of all ages should spend some time shopping for and delivering gifts to charities that distribute holiday gifts.  Your children should pick something they would love to have.  Them talk to them about how much the child who receives the gift will appreciate it.   (You can actually get a receipt from the charity and include it in your tax deductions, so everyone benefits!) 

Keep the holidays in perspective.  It will save you money and teach your kids more than just dollars and sense.