personal finance

Parenting Lessons I’m Learning as My Son Learns About Money

What makes a kid spoiled? How should allowances be handled? What is “good” debt? These are all issues that can be a ball to explore together, as one family law specialist discovered.

My son loves learning – both inside his elementary school classroom and wherever his curiosity takes him. These days he’s been learning all he can about money and investing. I don’t know exactly what prompted this interest in personal finance. But he’s learning everything from what a dollar bill is made of to how the stock market works.

It’s thrilling to watch him learn and grow – and to learn and grow through his interests, too.

In fact, I’m learning how to handle questions from him like, “How much money do you and Dad make?” Here’s some more on that and about what else I’ve learned during this chapter of my son’s life.

There are a lot of great books about money matters for kids and adults.

My son enjoyed reading Investing for Kids: How to Save, Invest and Grow Money. It’s a kid-friendly take on topics like why saving money is important and what portfolio diversification is and why it matters. (It would make an excellent holiday gift, by the way.) Thanks to this book, my son can tell you what a certificate of deposit is and about the history of the stock market. When he read about the United States Mint, I told him about how Charlotte, North Carolina, where we live, was home to the first U.S. branch mint, which specialized in gold coins, some of which you can see on display at what is now the Mint Museum.

Meanwhile, I read and highly recommend to parents The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money. This book got me thinking about all kinds of stuff, things like …

Spoiling is about more than material things.

The book’s author dives into three other factors, besides showering them with gifts, toys and fancy clothes, involved in spoiling a child:

  • A lack of responsibilities (like chores).
  • A lack of rules and parameters (like having unlimited access to electronics).
  • And undivided attention from parents all the time (like being able to interrupt Mom on the phone over something that can wait).

Even though I think I do a pretty good job in these areas, it was a refreshing reminder that there are multiple ways to spoil a child — and how not to do that.

Also, during this month of gratitude, it occurs to me that instilling an attitude for gratitude is also a way to combat overindulging ourselves or our children. Here’s an idea: Why wait for Thanksgiving to go around the table and have everyone say what they are thankful for? Why not do it all month – or all year – long?

Spending and saving are important, but so is debt.

When I was growing up, my parents did an excellent job extolling the virtues of saving money. But they didn’t talk about how to use debt or the difference between good debt (a mortgage) and bad debt (credit card balances). I figured it out on my own, but I could have figured it out earlier with some coaching.

I want to be an active participant in my children’s education, including when it comes to learning about personal finance. My son’s and my extracurricular reading reminded me that I need to teach my children about debt so that when they are young adults with credit cards and sights on buying homes, they have a solid understanding of debt and solid credit histories to back them up.

Policies on allowance vary from family to family, and that’s OK.

Having a policy on an allowance – whether to give it at all or tying it to chores or not – is important. After all, in parenting consistency is key. And if you are trying to teach your kids how to manage money, they must know consistently what they are – or are not – working with.

The Opposite of Spoiled author doesn’t mandate that allowance be tied to chores. He advises to instead give kids a small amount each week to teach the value of wise saving and spending, and to then increase that amount as children get older.

I disagree. I think payments should be linked to services or extra contributions beyond being a participating member of the household. I take this approach from one of my kids’ preschool teachers (shout out to Ms. Sarah!) who always said, “No one pays me to unload my dishwasher.” Likewise, I don’t get paid to make my bed, clean my room, or take my plate to the sink, and neither do my children. I will gladly pay for leaf blowing, grass mowing, getting trash out of cars, and doing any extra dirty job (that I don’t want to do myself!).

Kids need financial training wheels.

Your kid probably learned to ride a bike with training wheels. Why should learning how to manage money be any different? Fortunately, I learned there are debit cards made especially for children. For example, Greenlight® debit cards allow children to set financial goals – maybe they want a new bike or skateboard – and work toward them. They can see the benefit of saving their allowance and birthday money or setting aside earnings from babysitting or extra chores. And if they blow it all on something dumb, they get to experience their buyer’s remorse as they work to ratchet up their savings again.

Meanwhile, parents have flexible control – that’s the training wheels – and are alerted when their child makes a purchase. This could be a great solution for parents who always feel they are hit up for small amounts of money – for Starbucks, concessions at the pool, movie tickets and more, because all that stuff adds up. And all those small moments can be big teaching moments.

This makes me recall my adolescence. I don’t remember all the dumb stuff I wasted money on, but I do remember at age 15 saving up for something I wanted very much: a pair of Birkenstocks. Those shoes held up, and I wore them for years. They were worth every penny.

There’s always a kid-friendly, age-appropriate answer to tough money questions.

Many parents dread questions like, “How much money do you make?” Or, “Why does so-and-so live in a bigger (or smaller) house?”

In practicing family law, I have learned that what kids need most growing up is security and consistency. This does not mean that plans, living arrangements, schedules and financial arrangements cannot and should not change. It means children need to know that life does change, but there will be constants like family, friends and after-school activities.

Kids really don’t care if you make $60,000 or $600,000. What they care about is knowing when they get to see you … or their friends. They want to know that they are safe and cared for and loved. They want to know that you want them to do well in school and pursue their dreams. So, the next time you feel yourself squirming as your child asks you an uncomfortable money question, respond with a question back: “Why do you ask?” This gets to the real root of their thoughts and usually will allow you to not disclose your entire compensation package when they didn’t care anyway. 

Going with your kid to open a bank account is fun.

All this reading up on money led my son and me to the bank, where we set up his first bank accounts. It was a thrill. He pointed out the bank vault(!) with excitement. Then we discussed a strategy for him to regularly add earned money to his account so he would not incur any monthly bank fees. 

I love watching how he dives into learning. I love watching him become a young man – a curious, thoughtful, skillful, interesting young man. I wonder what we’ll learn together next.

About the Author

Tonya Graser Smith, Board Certified Specialist in Family Law

Founder, GraserSmith, PLLC

Tonya Graser Smith is a Board Certified Specialist in Family Law, licensed North Carolina attorney and founder of GraserSmith, PLLC, in Charlotte, N.C. She focuses her practice on divorce, child custody, child support, alimony, equitable distribution, prenuptial agreements and other family law matters.

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