5 Tips to Talk to Tweens About Money!NEWS | Nirasha Jaganath | September 9, 2013 at 7:31 pm
Virtual Piggy is a fabulous new way to help manage kids manage their money. It is a safer way than credit cards and allow kids some some freedom to safely shop without fearing bills later. Read more about Virtual Piggy way below. I love the conversation of kids and money and decided to use this as an opportunity to share my thoughts on the subject. Though I had a savings account when I was a kid it was not managed in the smartest of ways. I started the conversation of kids and money much earlier with my girls. Granted my girls are young (6 and 8 years old) but I do believe this important conversation is an important one. Considering the amount of adults I see living way beyond their means and incurring debt, I wish more parents started this talk earlier.
1. Fixed Allowance or Paid Chores
This is totally up to you and how you would love money to pass from your hands to your kids. Some people believe a set allowance removes the notion that kids should be paid for doing work and getting paid in their own home, and I feel if that works with your parenting style, do it. Set realistic amounts and be flexible that it may be tweaked after seeing whether it works. My suggestion is to start low and increase because doing it the other way may not make you the most popular person. I chose to do paid chores in my home because I never received an allowance in my home. I grew up pretty poor so no surprise but it was not a common thing in my circles anyway. I also did not want the notion of entitlement (this is a major work in progress in all areas, not just financial, in my home and I’m sure most) that you get paid for doing nothing. Let it be known that I do not pay for cleaning up, setting beds or taking a shower (yes, my 6 year old has asked) or anything that they were expected to do to pick up after themselves. I have 1-2 chores fixed per kid (things like emptying out recycle bin, emptying the dishwasher (my most loathed task).
2. Issuing Fines
Similar to how parents get paid for work, and get fined for breaking laws, we wanted to instill fiscal responsibility in our kids. While I never wanted to hold back pay (not that I have not been tempted not to) since I firmly believe in paying if work is done, I did not want them to be of the belief that money is a “receive only” one way street. I started the fines procedure for serious violations (which may include other punishment too – similar to how courts give you fine + punishment). The idea, though not popular, was understood easily as we explained how we get fined for breaking speed limits or jumping red lights (we kept the gory details of theft or murder crimes for another time). My aim was not to have to use it often but have it lurking there (like in 12 years I have had one speeding fine (don’t be jealous it was big enough fine to make up for the other years). So far I have only fined once but it is enough to make my 6 year old get emotional when we talk about it and her sob about how hard it was to lose the money she took forever to earn. Considering there have been no repeats, I consider it a success.
3. It’s all about the interest. Both ways!
We talk about banks a lot. It helps for kids to understand how money is used to lend/borrow and save. Talking about how you “earn” interest for saving money in the back prompted discussions as to why would banks even do that. I explained how they use your money and lend to others and charge them interest. It was a tough thing to digest but I knew they caught up when they started asking me for interest when I borrowed (yes, I did) money from them and took longer t return it. It also made them realize that when we pay with a credit card we pay a lot of money back if we don’t pay it on time. Also they understood why our bank stores our money and that is not the ATM giving us money, but giving us our own money.
4. It’s theirs to use, lose or choose!
With earnings come responsibility. When you leave it around it won’t come walking back to you, if you lose it, it is gone. When you decide to use it, it is spent. Wanted the fancier earrings but totally bought the sale item the week before? Well when you spend it, it is gone! They slowly learn that sometimes patience is a virtue and waiting is painful but worth it. Choosing what you want means your decision to buy a bracelet which has the gemstones fall on in 3 days is something you have to take a chance on and wonder if it is worth it. I was incredibly proud or my then 7 year old, who after a few bad experiences, actually asked the cashier whether the gemstones will stay on forever. Experience teaches them to be more careful with their money, but honestly they learn that faster than to be careful with yours.
5. Quantity vs Quality and Social Responsibility
At first my kids loved the dollar store until the items started falling apart in a day or two. Nothing more painful than seeing your money go down the drain. The staff in Hannah Anderson know my kiddo well. They were stunned when she walked in and tried to see if she could ransack the Clearance section. Her impeccable math skills came to her rescue as she worked out how to get the maximum # of items. Then I reminded her that it is quality and not quantity that mattered. Last week she was at Claire’s and the cashier was also impressed how she worked hard to get her one perfect item and then she asked “Do I need to pay tax too?” It took her a long time to save the money and she was bitter at having to pay more until I reminded her that the taxes pay for the lovely roads and the police who keep us safe. Social responsibility goes a long way.
I love that Virtual Piggy has opened a discussion that is so necessary to be had. Maybe this way we can breed a generation of fiscally responsible individuals who value saving over debt. Oh, did I mention they have a fab campaign with Claire’s which in my opinion is a perfect match and get this with One Direction movie
About Virtual Piggy
Virtual Piggy was created to provide kids and teens with a safe environment to learn how to spend wisely, save for the future, and donate to charities. Our COPPA compliant technology empowers them to safely shop online, while keeping parents in control and creating a family conversation around financial literacy.
Disclosure: This post is sponsored by Virtual Piggy but the content is solely mine!