Tip #21 – Have the Talk, No Not THAT One, the Money Talk

Sep 26

If money grew on trees, I’d probably have an easier time explaining the value of a dollar to my kids than what I do with today’s spending technologies.  At least then, my children could see the latest collection of ripened bills (we’d go out every morning to reap the harvest), and the family would discuss how best to use our stash.  Should we save it?  Use it for essentials?  Or just squander it at Banana Republic (even just a bit)?

Unfortunately, my kids are growing up seeing very little exchange of actual cash.  Instead, I rely almost exclusively on my debit card.  This observation is not lost on my kids, the youngest of them recently exclaimed: “I want a card with money in it, too.”  Ah, if only it were so easy.

Soon, mobile payments will become as ubiquitous as the plastic card.  With a quick wave of the cell phone over a scanning device, (such as is offered by the Bank of Montreal and Mastercard for purchases up to $50), and TA-DA.. an item is paid for.  For those of us (read: adults) who keep track of our dwindling bank accounts and bulging credit, it’s a convenient extension of our usual purchasing practices.  However, in the eyes of an eight-year-old who wants to buy the $50 LEGO set, it’s probably more akin to magic.  Why can’t you wave your phone for stuff that I want? he may complain.

That’s why the money talk is becoming as important as that other talk.  Raising financially responsible kids is no easy feat thanks to today’s spending technology.  However, we can help them understand that an exchange of money is taking place by talking about our transactions.

After paying for groceries, for example, explain to your child that the money used to pay for the food has been taken out of your bank account and been sent to the grocery store’s account.  Even while shopping together, be honest about how much you are willing to spend, and why.  Point out the cans of soup that are on sale versus the ones that are not… and why it makes more sense to purchase the sale items.  You can take it a step further by explaining the importance of setting budgets.  The less you spend at this store, the more you can save for other things, like a family vacation.

Our kids earn an allowance for doing chores.  When they want to buy something for themselves, they can spend their own earnings.  Funnily enough, they’re a lot pickier about what they want when they know it’s coming out of their own wallets.  This experience is great training for the days to come when they have more to spend, and more at stake.

Of course, kids learn best by observing their parents’ behaviour.  I turn off lights to conserve energy and lower our electricity bills.  I point out sale prices at stores.  But I also buy plenty of things that are far beyond the periphery of essential purchases.  Usually with a debit or credit card.  Perhaps that’s why one of my sons recently asked how old he had to be to get his own credit card.  As alarm bells went off in my head, I calmly told him that every month, his dad and I pay back all the money we’ve put on our credit cards and that anyone with a credit card needs a job first.  By the time I segued that conversation into his need to do more chores, he’d lost interest.  Work? For money?  Bah!

Yep, son, money doesn’t grow on trees.  And it doesn’t flow out of mobile phones, either.

Image: worradmu / FreeDigitalPhotos.net

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