Teaching kids about money seems daunting. My kids run around the house screaming the title of my book, "BUT First, Save 10" laughing hysterically with their emphasis on BUT, as they get a "legal" pass on a potty word we otherwise discourage.
But it leaves me to wonder if my husband and I are getting through at all? About anything?
While I am admittedly in the early stages of a 22-year experiment to teach our kids healthy money and saving habits, I have done quite a bit of reading and listening to develop our process. We are a few years into our plan to teach our kids about money and have already seen positive signs.
Before sharing logistics, here's my objective. For me, I see young people, and my young past self, with a few problems: the need for instant gratification; lack of momentum starter savings; and lack of financial education basics. My goal is to strengthen their brains by setting them up to make good money decisions on their own and build natural habits for delayed gratification, a savings account that they can build on in adulthood and some basic reflexive lessons on always saving 10% and paying credit card balances in full every month.
Now for our process. Of course, we have the jars with each kid's name on them. And then in our cabinet is a big stash of $1 bills and quarters. It's super important to be prepared to maintain consistency. Then the payment. I knew with the chaos of our lives that elaborate chore charts and complicated algorithms would be difficult to maintain. Instead, I simply pay my kids to do things.
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Let's sidebar. If you are in team allowance for being a citizen of the house versus getting paid to do various chores, that's fantastic. There is much debate on which course is right, but from my perspective, you do you.
I pay to alleviate the pain point of the moment, and that vacillates between the kids getting ready in the morning to getting ready at night -- people, I will pay $1.50 for either. Yes, that is a lot of money, but you will see why in a minute.
On the other hand, when I need a quick job done like the dog walked or shoes organized then I might even pay a little more.
The funniest thing I have noticed is that sometimes I forget to pay them, and they forget to ask. It's probably because those tasks become habitual. We will no doubt shift what we pay for as those habits evolve.
OK, so now they have these money jars brimming with dollars. Then we have two stops.
First we go to the bank. Then we go to the toy store. The rule is that we match dollar for dollar the savings they put into the bank. They are allowed to withdraw at any time, but we get to take out our dollar when they take out a dollar. So far, there have been murmurs of rebellion and withdrawal but no follow-through.
Their savings accounts are at Bank of Little Rock, and Samantha and Cindy and all the folks in there greet the little ones as they walk in proudly (and rambunctiously) with their money jars. Then the savings decision takes place. How much will they save right on the spot with grown adults cheering them on and encouraging them to save? It's tough because every dollar they save is one less that they can spend at the toy store. At minimum, they have to save 10%, and I am always surprised and elated to see that most of the time they do save 50%.
One at a time they hand over their dollars, and then I make a show of withdrawing that same amount from my account, handing it to them, and then they deposit the full amount.
After all the deposits are made, the new account balances announced, and they take the requisite tour of the vault to make sure their dollars will be safe. They then get their suckers and feel pretty good about themselves.
Then, it's off to the toy store. This is where I know real pain is about to come. Every single kid's first time to the toy store to spend their money was terrible. But amid the temper tantrums and screams and sideways glances from other shoppers, you realize what is taking place.
They are in the process of learning three massive lessons in one trip: the value of a dollar; money is finite; and they wish they had more of it. This causes them to redouble their efforts to earn more money, and by the next trip to the store, there's no problem. They know how much money they have, and they know what things cost. And they have absorbed the awful knowledge that Momma's not chipping in. They just have to figure out the puzzle of what they want to buy.
Back to the saving decision. I want my kids to have the chance to accomplish one large savings goal while under my roof, and for me it is buying their first car at age 16. I have been telling my kids that I would not buy them a car. And like a mantra I tell them that their future 16-year-old big kid self will thank them for saving as much money as possible. So, the reason I do pay a little more than normal is I am essentially investing in their own cars in a roundabout way. By channeling this money through their hands and giving them the decision to save and enough money to buy a car one day I am setting them up for success.
My oldest is a spender. He struggles the most with the saving decision, but my husband stepped in with an interesting practice. He got a large bin and put it in the garage. When he finds toys laying around, he quietly puts them in the bin. Every now and then he takes the kids out there to see the discarded toys that they have long forgotten about. And it serves as a lesson. Those cost money, and what if instead of buying that plastic junk they had saved even more money. They could have even saved that money for a much nicer toy that they would play with more.
After four years of saving all or some of his allowance money, birthday money and Christmas money, I am proud to say that my oldest has his first "comma" in his savings account balance. He asks me from time to time to pull up the bank app and look at the number. Just like adults and saving, kids feel the momentum of saving -- saving at some point becomes its own reward. It almost becomes a game. I have even noticed that I don't have to nudge as strongly as before for him to save at least half his money.
I think the big secret sauce was involving our bank in this process. It would be easy to just transfer that money from our account to their savings account. During the pandemic, while the bank's lobby has been closed, we have seen that the transfers using my phone just are not quite the same. When you can get back into your bank, let the teller know what you are doing, and you might find that they are pretty enthusiastic about being a part of the kids' financial education. Some banks have dedicated programs for children and saving; Simmons Bank even has a Save10 account dedicated to kids saving.
I would never presume to have the right system to teach kids about money. When people ask me how to do it, I share my process. If they have a different one and ask which is better, I always answer "yes." Doing anything will teach kids about money. Just make a plan, be prepared, and be consistent.
Sarah Catherine Gutierrez is founder, partner and CEO of Aptus Financial in Little Rock. She is also author of the book "But First, Save 10: The One Simple Money Move That Will Change Your Life," published by Et Alia Press. Contact her at sc@aptusfinancial.com.