By Scott Tschappat
Kids grow up so fast that sometimes teaching them about money gets lost in the mix. How do you make your kids feel like they have everything they need yet not give them everything they want? My wife and I have asked ourselves this question about our two daughters, currently 12 and 14. Allow me to give you a glimpse into our methods of teaching our kids about financial topics.
Early on, we tried giving our girls some money each week for a few chores, but we also came to the conclusion that this wouldn’t work long term. Times have changed so much that you would have to pay them too much each week for very little work!
When I was a kid, my dad never understood why I couldn’t remember the trash each week. Well, at the time, it just didn’t affect me. Now a dad myself, I know what missing a week of trash does as the stinky stuff piles up! This idea of doling out money weekly just didn’t make sense. Most of the money we made was already going to them anyway. (Those of you who’ve experienced double day care expenses understand.)
We expect our daughters to participate in cooking, cleaning, and overall house cleanup; to clean up after themselves and take care of their laundry. For this they get money when they go out with friends to the movies, lunch, or shopping. It’s now over $10 for a kid to even get a full meal at a fast-food restaurant. It would take them a long time to save for a smartphone with an allowance.
I will pay both girls to help out with big house projects. They can earn extra money by helping with yard work each summer, raking leaves in the fall, helping paint their rooms, and putting away Christmas decorations (because everyone only wants to help put them up). I pay them as if they were the low man on a landscaping crew and set a time limit they think they can handle.
I recently told my youngest that she needed to find a safe place in her room to keep her money. At first it was tough for her to understand that someone she knew could take her money. I explained to her that your money is just better kept out of sight. I don’t have to worry about this with my oldest because she spends her money as fast as she can get it or make it. (Right now it’s a trip to Lululemon.)
The girls put their money in two separate places somewhere in their room. We also keep an envelope of their money in the safe so if they want something bigger, we can have a discussion about larger purchases. If they get $125 as a gift, they will keep $25 and put $100 in the safe. We recently decided to open savings accounts at our bank, but that was mainly for family to give them money by check for birthdays, etc. Our kids don’t have credit cards yet, but with so many places not taking cash, this will be the next thing we tackle.
I recommend teaching your kids about money on a daily basis if you can. After her volleyball game this spring, my youngest was in the car when I stopped to get gas before heading to get her dinner at McDonald’s. I was grumbling at the price of gas and how it was getting more and more expensive (and this was when gas prices were only $3.78 per gallon!), so I asked her how much she thought it cost to fill up the car. She looked at the bright sign and said, “$3.78.” “Times 16,” I said back. When she saw that it was over $60 to fill the tank, she said she didn’t need McDonald’s after all. Another time she asked me how she could make some extra money; I said she could help me with a project. She replied, “No, Dad, how do I make money that is not already our money?”
Our oldest daughter has trained as a babysitter and is already making money for herself. They both helped a neighbor just this week. When they receive money for working, we allow them to buy something and put some away in their rooms, but about half will be saved for future use.
We do not make our daughters tithe their money yet, but their school requires a certain amount of volunteer service hours each year, and they understand that giving their time is just as important as giving their money. For many years, they have worked soup and sandwich lines at city churches in downtown Denver and have volunteered helping younger kids with various day camps during the summer.
Saving for the Future
When the girls were born, I decided to use life insurance as a place to save money for them. They each have a life insurance policy that I have been putting money in every month since they were about one. The first reason was to preserve their insurability; both my wife and I have some hereditary issues, so we wanted to make sure they both have life insurance at a very inexpensive cost for the rest of their lives. This permanent insurance builds cash value which can be accessed if needed throughout their lives. For example, a few years back, when we signed up our oldest for her first stay-away camp, we got the notice that there were only a few spots left for next year. Since she had a great time, we borrowed against her policy to reserve her spot for next year. We paid that loan back over time when we wanted.
Another benefit is that because the cash value that builds in their policies goes up and down with various markets, I’m able to teach my girls about those markets each quarter (now that they understand math).
Do You Need a Financial Partner?
The one thing my daughters know for sure is that nothing is free. Everything comes with a cost. Do your kids have this same understanding? If you’re looking for a little guidance in teaching your kids about money (or if you could use some help yourself), our Acute WealthCare team is here for you. Schedule a 15-minute introductory phone call to get started!
Scott Tschappat is a wealth advisor at Acute WealthCare, an independent, fee-based comprehensive financial services firm with over 20 years of experience. Scott is committed to helping his healthcare worker clients create a financial plan that brings them comfort and dignity. Scott learned the importance of proper financial management and making a plan for the unexpected at a young age when his father passed away suddenly and he watched his mother use the life insurance money wisely to take care of their needs, both present and future. He strives to steward his clients’ money well, as if it were his own mother’s, and help them every step on the journey to their financial future.Scott lives in Highlands Ranch, CO, with his wife, Bridget, a school counselor at All Souls Catholic School, and their two daughters, Sarah and Emily. He loves sports and has been lucky enough to coach both of his daughters’ basketball teams. In the spring and summer, you can find Scott getting his hands dirty gardening and enjoying live music at Red Rocks or another local venue. To learn more about Scott, connect with him on LinkedIn. You can also register for his latest webinar on What We Do & How We Help.