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Kids and Money: Education, experience and the allowance debate! {Episode 40}
98 Plays5 years ago
Teaching kids about money! In this episode, Bonnie and Audrey share all about how they go about teaching their kids about money. They answer the great allowance question, give advice on helping kids understand money concepts, and offer resources for educating yourself. There's a lot of information out there about money, and this distillation of what works for them and each of their families sheds light on the topic.
Recommended in this episode:
Qeepsake (App Bonnie uses to track her cute kid sayings)
Recommended
Transcript
Introduction to the Podcast
00:00:06
Speaker
Hello and welcome to Outnumber the Podcast. I'm Bonnie. And I'm Audrey. And we're homeschooling moms to a combined total of 18 children. We know firsthand that motherhood is full of crazy chaos and overwhelming obligations, but it should also be full of love and laughter. Regardless of where you are on your journey, come join us as we work together to find joy in the chaos of motherhood.
Teaching Kids Money Management
00:00:31
Speaker
Hello and welcome to episode 40. Today we're going to be talking about kids and how we handle money with kids. And this is kind of a companion episode to the very popular episode that we did earlier on kids and how to afford kids episode 25. That one's kind of gone viral and you guys love that. So we thought we'd talk about the other aspect of it, how we train our kids about money.
00:00:55
Speaker
Yeah. Yeah. It really is two different subjects, how you handle your own money and then how you teach and manage money with your children. So this should be fun. Yeah.
Listener Feedback and Humorous Anecdote
00:01:08
Speaker
Okay. So we're going to start out with a review. I got a review for you and Bonnie's got a humor segment.
00:01:14
Speaker
Okay, so one angry apple, one, two, three, left a rating and it says, a fun listen. It feels like I'm on a three-way call with these moments. I love the experience they offer and the lighthearted mood they bring to motherhood topics. Heart, love this. Thank you for that review. Oh, that's so sweet. Yeah, I have to share that the more I listen to podcasts, the more I realize how
00:01:37
Speaker
much. We are not professional podcasters, but we are kind of professional moms. We've been doing it for a while and we love motherhood and we love sharing. And so we're so grateful for you guys that keep sticking around, keep listening, even through our ums and stumbles and our mom brain that forgets everything. So thank you.
Why Educate Kids on Money?
00:01:56
Speaker
Yeah. Yeah.
00:01:57
Speaker
Okay, so I have a quick humor segment to share. It doesn't have anything to do with money, but I recently rediscovered my kid's quote book where I was writing down all the funny things and cute things they said. This is a really fun thing to do, by the way. In fact, just a side note, if you want to start doing this, in the show notes, I'll include a link to a super awesome app I use to do it now, so you don't have to have an actual notebook. Everything can be digital.
00:02:21
Speaker
And this was from my oldest when he was just little, maybe five or six. He was building some sort of a Lego base. And he said, mom, mom, look at what I'm building. This is the, this is my OSS base. Like, oh, that's cool. What does OSS stand for? And he said, justice and liberty.
00:02:43
Speaker
Wait a minute, what? I'm wondering what OSS stands for. Like, is it Operation Something Something? He says it stands for justice and liberty. Like, that's what they stand for. Those are their values. I thought, oh, that is just adorable. So cute. Yeah. Good times.
00:03:08
Speaker
Yeah, I need to use the app and start writing things down because I'm starting to forget all the cute and funny things that my kids have said. Yeah, sometimes I forget them by the end of the day. Seriously, it's just said in passing and I'm like, oh, that's cute. And sometimes you're so focused on what you're doing that it doesn't even really hit you how funny or cute it is until you tell someone later. And so that's my tip is just to pull it and record it really quickly and then you don't forget later. Yeah.
00:03:36
Speaker
Okay, today we're gonna talk all about kids and money, how we educate our kids about money. And we're gonna discuss some of the different things that kids, some of the ways that they, just the innate money skills that they have and the ability to deal with money or the inability to deal with money. And so all about kids and money. You can imagine with like 18 kids between us, we have a little bit of experience with the different ways that kids react to and handle the different ideas they have about money.
00:04:06
Speaker
Yeah. And it's very interesting to see even at a young age how kids react to money and things that they want and earning things. It's really fascinating to teach them. And we are also going to approach the great allowance question of whether or not you should give your kids money to spend. So this should be fun.
Money as a Tool, Not Emotion
00:04:25
Speaker
Okay. So we're going to start with the why. Why do we
00:04:29
Speaker
teach kids about money kind of seems obvious, right? But this is sort of a new thing. Our generation and our parents' generation, money was kind of a taboo thing to talk about, or maybe that was just, I don't know, in my experience. But we want to prepare our kids for a successful financial future. We want them to be able to fulfill their dreams if they want to travel, if they want to do whatever they want,
00:04:59
Speaker
I want them to be able to afford it and we want them to learn to be generous givers. So those are three of our goals for our kids, teaching them, educating them about money.
00:05:10
Speaker
Wow, I love that, especially the generous givers part. What a great legacy to leave your children is a good healthy relationship with money and the ability to give it away and to use it for good. And really, even though money often evokes so many emotions, money is really a very emotionless object. It's just a thing and it's really just a tool.
00:05:35
Speaker
But all of us have a little bit of passion tied to it, whether we grew up without a lot or we had a lot and we feel like it did us no good or we've misused it or whatever. Money has a lot of emotion tied to it. So I think the trick is to separate it from the emotion and teach our kids how to use it as a tool, right?
00:05:55
Speaker
Sure, yeah. And I know that whether we like it or not, whether we agree with it or not, money does have some social status connected to it, whether you have it or you don't have it, just from the fact of
00:06:12
Speaker
you know, keeping you out of hunger and then all the way to the other end of the extreme, you know, there's just some status connected to money or the lack thereof. And like we kind of have, oh, maybe respect toward people who have more money or, you know, just admiration or, you know, a whole host of things that can be connected with money. And we just want our kids to have healthy ideas and thoughts and success with money all around.
00:06:42
Speaker
Yes,
Involving Kids in Family Finances
00:06:43
Speaker
absolutely. I think that's where a lot of the emotion comes from is that we use money as a status symbol and we think that we'll become better people or more important people or more lovable people if we have more money. And we often view other people the same way, even if it's unintentional. I do not walk around thinking all people with money are more valuable than people without money. Obviously, I don't believe that.
00:07:06
Speaker
But I find myself acting that way sometimes. It's really kind of disturbing. And so I think that that healthy relationship in teaching your children that it is a very non-emotional tool to use and to keep it from taking over their life in an unhealthy way is a really, really important thing to pass on.
00:07:26
Speaker
Okay, so our whys are similar to yours. I love everything you listed. Also, it's really important for me that my kids understand, just have a little bit of a clue about how expensive life is. So we moved into this new house last year. It's not new, but it's new to us. And obviously, a bump in mortgage, a bump in, electrical costs, water costs, everything.
00:07:49
Speaker
It's been very eye-opening for us to just adjust to this. That happens anytime you have a big transition like that, but also to communicate that to our children. So we have children that are old enough to really understand that. And I'll talk a little bit more about that later about how important it is for them to be aware of what your financial situation is.
00:08:08
Speaker
Um, another why is to prevent entitlement. Honestly, personally, I don't know if there's anything worse than a selfish child and a child who has no clue what everyone around him is sacrificing for him. And that just expects things to be given to him. It, uh, it infuriates me. I really, really hope my children are not entitled.
00:08:25
Speaker
And then finally, I want to teach them the value of work and money management skills. And just a quick little example of this is we recently started our little family economy with my six year old, usually five and under. We don't really do much with them. And I'll explain how we do that later. But it has been so fun to watch him
00:08:44
Speaker
save for things and to like, you know, do this pro and con, this analysis between the things that he wants and like, is that worthwhile? Is that more worthwhile? We'll go to the store and he'll see a pack of candy and he'll say, can I have it? And I'll say, you can, but remember this one thing you were going to save for that would take some money away from that. He sits and he thinks about it. It's just so fun to see kids, you know, do that delayed gratification because they're really hoping for something else. It's just awesome to me.
00:09:12
Speaker
Yeah, absolutely. I love those whys that you guys have too. Okay. And now we're going to talk about specifically how we teach our kids about money and go through some of the exact things that we do.
Introducing Economic Concepts
00:09:26
Speaker
So we're really excited to share this part with you.
00:09:30
Speaker
Okay, so we start at a pretty early age and we just expose our kids. Obviously, you know, as part of their math that you start teaching them about currency and about money and about adding. And, you know, this shape is a nickel and it's worth five cents, you know, that all comes with math. So that comes pretty early.
00:09:48
Speaker
currency and learning about dollar bills and numbers and all that. That's pretty obvious. But it's a good time that we like to start discussing money with them. And one thing we introduce really early on to our kids is the idea of being a consumer versus being a producer. And we like to encourage our kids early to adopt inside on the side of the producer mentality. So instead of using money to consume,
00:10:18
Speaker
We like to use money to make things, to produce things.
00:10:23
Speaker
to be able to sell things and generate more money and just kind of start on that idea really early on. I really like that concept and sharing it with your kids. You know, we actually recently had a conversation with my kids about consumer versus producer of media, you know, like it's so tempting to just sit and scroll on our phones or watch TV all day or watch videos all day, but we can focus on putting more good into the world instead of just consuming whatever is out there. And I love using the same, um,
00:10:52
Speaker
having the same conversation in regards to money. I think that's great. Oh, yeah. Yeah. Consumer versus producer can be applied to so many areas of life. Yeah.
00:11:03
Speaker
Okay, so then when they get a little bit older and they can understand and we start introducing different money paradigms. So we talk about how the one money idea in paradigm is school of thought is savings and taking advantage of the value of compounding interest.
00:11:22
Speaker
And now in our days of super, super, super low interest rate, this model is kind of not the best way to build wealth through compounding interest because it just doesn't happen with super low interest rates. Anyway, we discuss all that with our kids. And then we talk about the idea of cash flow and talk about money.
00:11:46
Speaker
in the concept of it being like water. And so instead of thinking there's a finite amount, and now that we're not tied to that gold standard anymore, you know, we introduce that to our kids. So we talk about money using the concept of water. So it's flowing.
00:12:04
Speaker
And you can use buckets and say, see the water's flowing from this bucket to this bucket. And that's a fun one to do with kids. And then another, OK, so then we talk about debt. And we introduce the ideas of good debt and bad debt or building your credit through debt or lots of debt ideas. And we just start talking about this stuff in front of them. And really, even before they're too old enough to take
00:12:29
Speaker
part in the conversation. They just kind of, you know, listen in and are picking up on some of these concepts. And then one final thing that we introduced pretty early to our kids is the idea of active versus passive incomes, because that really gets their wheels turning. You know, they go to Walmart and they're like, OK, this is, you know, who here is making money through active? You know, the person, the cashier there and they're making money through something they're doing. And then passive income is maybe
00:12:58
Speaker
like the owner of Walmart, you might say, and he's not doing anything you could say to make money that day. He's already got his wheels in motion, it's happening. Not the greatest idea example, but you start talking to kids about active versus passive income at this stage as well.
00:13:15
Speaker
Yeah, I love all those concepts. And honestly, I think I need to sit in on more of your money management talks because I'm still learning a lot of it myself. And I'm realizing how poor of a money education I had as a kid. And I think that that's really, really common nowadays.
00:13:32
Speaker
It's not talked about in schools hardly at all, which I think is really sad. And then if so, if parents don't take an active role in explaining these things to kids, they go out and get a credit card and rack up all this debt and very painfully learn the lesson of cash flow and of debt asset management and all these things. And so if we can teach our kids early on and learn ourselves first, then our kids are gonna have a much bigger headstart than all the rest of their peers in building wealth as they get older.
00:14:00
Speaker
I don't feel like I had a great money education growing up either. I remember in high school, there was this class that you could take on finance and I was like, huh, what's that? But my husband is super good at all this stuff. He's really into economics and has studied in depth a lot of different financial ideas. And you know, the cool thing about money and the education of money is
00:14:24
Speaker
It's something we can learn right alongside of our kids. Like our education on this never stops until we stop using money, which is when we're dead, right? Yes, agreed. Yeah. And we need to be open to, yeah, to learning the things right along with them and letting them know when we don't understand something or when we've made a mistake. I really wish I would have seen people making money mistakes when I was younger so that I could have avoided some of them myself.
00:14:48
Speaker
And we've slowly started sharing our own family finances with our kids. And it's a very easy way to teach them things. So like, you teach them about mortgages when you get a mortgage, or if you've had one in the past, or if you're thinking about one, or somebody else buys a house and you say, do you know how people buy houses? Most of the time, it's not with cash, et cetera, et cetera. And like you said earlier in the intro, this used to be very taboo. What was the social rule was you'd never talk about
00:15:17
Speaker
politics, religion, or money in polite companies. But I really think that we do our kids with disservice if we don't have very open, frank conversations about this is what our income looks like, this is what our expenses look like. We don't have to tell them everything, but I don't think that it hurts to let them in on the situation. Yeah, absolutely. I agree. Then when kids get a little older, then we start talking about economics. Now, this is sort of high school level.
00:15:46
Speaker
And as they come up to it in their study of history, we talk about economics and about the different schools of thought on economics like Keynesian and Austrian and how those developed and when they developed and why in history they developed. And then, you know, as we go through history, we talk about, oh, like, you know, the Weimar Germany is something we're studying right now, the time between World War I and World War II. And when money was just like,
00:16:17
Speaker
My son and I were talking about how the kids in Germany, they just used it as like building blocks and they were just money in the streets. They burnt money to keep warm because it was cheaper than firewood. Yeah, so as they come up to it, it's a good place to start a conversation. Oh yeah, you know why that happened and there used to be a gold standard and so you just talk about all these things as they come up in their high school studies.
00:16:41
Speaker
I do remember a very early lesson about economics when I was a kid. We lived in Mexico multiple times because my dad was on foreign assignment for some automotive companies and we went there one time when I was little and the peso was at a certain point and when we came back maybe eight years later.
00:16:59
Speaker
it had devalued so much that it was worth almost nothing. And I remember as a 12 year old thinking, wait a minute, you mean, you know, 100 pesos used to buy, you know, whatever a shirt and now it buys a candy bar, you know, or even more. So I can't remember exactly how much devalued. But it was such a foreign concept to me that money could could be devalued, that it was not this constant. And I think that that was an important lesson for me even early on.
00:17:29
Speaker
Yeah. Yeah. And then another thing to discuss as they come to it in history is the different economic systems. These systems like socialism, capitalism, communism, they're political systems, but there is also economic ramifications and systems of all these two. So then we, this is like right up my husband's alley. He loves to discuss all this stuff and I just sit back and listen and learn right along with the kids.
00:17:57
Speaker
Okay. And then next we start with practical, putting in some practical applications for our kids. So like when they get old enough, we teach them how to write a check. And like, I think we discussed this in another earlier episode.
Business Lessons for Kids
00:18:10
Speaker
I don't even remember which one, but I think you and I both start sending our kids into the grocery store
00:18:15
Speaker
to pick up something for us and then they learn how to use your card or how to write a check as they do that. And then they start thinking about how much money costs and comparing the prices of things. So like you said, helping with the family financials. And then we encourage them to start setting personal goals and how to achieve it. And in our episode 25 on kids and family, I went specifically through how we help our kids
00:18:42
Speaker
set goals for college and then how to pay for it and walked them through that. So I won't repeat it here, but that's a pretty big goal that we're with a practical application that we're working through with our kids. And it's really, really exciting to see them have their own personal financial goals and to be meeting them. Oh, I bet. That's so cool, especially as they get older and they need to save for something gigantic like college or a car or or any number of things. That's so fun.
00:19:13
Speaker
Okay, one thing we do for, oh, about age 10-ish, it depends on the kid, but we encourage them to run their own business. So come up with a business idea and run it. So, you know, how are you gonna get your business started? So for example, I'm just gonna use one of my kids' little businesses that they had. My son made and sold zucchini bread and banana bread at Farmer's Market. So he got a stand and he, you know, paid
00:19:41
Speaker
took a loan from us to get his first set of ingredients. And then out of his earnings, he bought, you know, supplies for the next time and then, you know, so on. And he was building his little farmer's market zucchini bread business and selling it. And oh, we have pictures of him. I guess I can put one on Instagram this week if I can find it. This is my big 19 year old son. And when he was, oh, I don't know, 10 or something and he's like got 18 pans laid out in front of him and he's dishing up the
00:20:10
Speaker
the banana bread or whatever he was making. So he had a successful business and by the end of the summer, he's got some money in his bank account and he's like, wow, that was really cool. And you just dip their toe in the waters of
00:20:26
Speaker
what it is to run a business at a very early age. Oh, I love that so much. And as entrepreneurs, obviously we both feel very passionate about teaching kids to their own businesses. And we've only started doing a little bit of that here because my kids are younger, but I'm so excited. And I'll just offer, I honestly think that we should do an entire episode on kid entrepreneurs and talking about how to encourage kids. It would be so fun.
00:20:53
Speaker
But just two little tips that I was thinking about and wanted to share right now is if you want to get a kid involved in their own business, I think one of the first things you need to remember is to allow your child to fail. So this is very hard for me because I'm type A, control freak. And like, you know, if a kid comes up with an idea and they're really excited about it, my first reaction is that's not going to work. I'm just trying to be realistic. I don't want them to fail, right?
00:21:20
Speaker
I don't want them to see them heartbroken. I don't want them to lose money, but that's probably the biggest lesson anyone learns in business is to allow yourself to fail and fail quickly. If they want to sell friendship bracelets to a bunch of girls who are already making friendship bracelets, let them try it.
00:21:39
Speaker
And then maybe they'll think, actually, I think I need somebody and then they learn and evolve or whatever. I think that's just a really great tip. That's totally what happened to my son at Farmer's Market. That's how come he went out of business because everybody else at Farmer's Market saw this 10 year old kid making banana bread and zucchini bread and started adding, you know,
00:21:57
Speaker
sweet breads to their own farmer's market stand. And so then he had competition and he ended his business, um, on a high note with a bunch of money in his account, but he, and he moved on to something else. He evolved and changed, but yeah, that, that was an awesome lesson for him to learn too. Yeah. And to teach them that just because that phase of your business or that business ends does not make you a failure. You, you pivot, you know, you, you evolve, you keep changing to meet the market needs and, and that makes you a good business person, not a failure, you know? So I think that's so crucial.
00:22:28
Speaker
Yeah, absolutely. And then the second thing I was going to say is that it sounds like you already addressed this, but don't shield your child from the realities of running a business. For example, don't go to the store and spend $50 on supplies that they can then just blow and keep the profit.
00:22:44
Speaker
Most parents' tendency is, oh, you want to have a lemonade stand? Okay. Well, let's go buy the lemonade and let's go buy the cups and let's go. And your kid has no clue about overhead and he has no clue about costs. Instead, he's just raking in for your profit. And then when he wants to do it again, you're like, well, you know what I mean? So I think that even an eight, nine, 10 year old can understand that it costs money to set up and then you get gross income and then you have to pay yourself back. So such an important
00:23:10
Speaker
a thing. And I think that you hit that on the head already and you're teaching your kids the right way. It's a good view.
00:23:17
Speaker
Yeah, yeah, totally. It goes back to what you say about letting them fail because it's all part of the education if you're enabling them as well. I mean, it's such our nature, you know, to want to help them out. They've got this cute little idea and you want to help them, but they'll have a bigger sense of accomplishment if they've done it all themselves. I mean, because they know that, you know, like, oh, mom helped me get started on this, you know, or whatever.
00:23:42
Speaker
And it doesn't mean you can't give them a loan or even some seed money. Hey, I'm going to give you 20 bucks. You don't have to pay me back. But be aware that this is all you have. And you need to be making some calculations so that if you want to do a second run, how much is it going to cost, et cetera.
00:23:56
Speaker
Yeah.
Financial Independence for Teens
00:23:57
Speaker
And then the final thing we do as our kids get older and get teenagers and beyond and they want things or they need things, we have them to start to contribute to the family or become financially independent gradually of us. So like at a certain age, and we haven't said this to any of our teenagers, but at a certain age, they just start buying their own clothes. I think it's probably when they got a job and got their own income and they just kind of felt like
00:24:23
Speaker
They really didn't want mom and dad to have to support that part of them before. And I know I mentioned in our episode on kids and cell phones that our kids pay for their own monthly bill and they contribute insurance for the car that they drive that's on our insurance policy.
00:24:40
Speaker
and help buy a car and all that. So they are also contributing and becoming slowly financially independent even though they're still living in our house. And that's a really good thing for them to have practice because we don't want to just turn them out into the world completely untrained financially and they get their first house and they're like, rent? What's that?
00:25:05
Speaker
Oh, you mean I have a car payment? Yeah. They buy, you know, they get a place to rent that costs three-fourths of their income because they think, oh, hey, I'll have, you know, 25% left. And then they didn't factor in food and gas and insurance and, you know, everything else that comes with it. But no, we want to turn out kids into the world that have a financial savvy and they're not hurting themselves and starving and hurting others.
00:25:32
Speaker
Yeah, exactly. And I bet there are probably some of you out there thinking, well, how do I even teach my kid these things if I don't know myself? Like, that's kind of how I was. Just even just a few years ago, we were still figuring things out, you know, on our own. But we'll link a lot of resources in the show
Prioritizing Wants and Needs
00:25:49
Speaker
notes. And I just want to share right now
00:25:51
Speaker
that Dave Ramsey and his cash flow system is a great place to start, especially for kids who are getting older, getting jobs, et cetera, because he even gives you like percentages that should be spent on things. So for example, it could be a really fun
00:26:06
Speaker
activity with older kids to sit down with the family budget and say, let's run our numbers against Dave Ramsey's suggested numbers. So this is how much we spend on housing. He suggests whatever, 8% or 10, 30%, something like that of your income. Is ours too low? Is it too high? Can we adjust it, et cetera? Anyway, just want to put that plug in because it can be a little overwhelming if you yourself don't feel confident
00:26:33
Speaker
about finances to try to teach your kids, but there are so many great resources out there. Absolutely. Yeah. I've got several in the link too.
00:26:41
Speaker
I'm just going to share a couple of things that we've been doing, practical applications of finances with our kids. Then we'll talk about the allowance question because I know that that's probably what everybody's most curious about. Like I said earlier about my six-year-old who's learning to save, it is so important to me that kids understand the value of delayed gratification. This is something that I did not learn until I was probably 30 years old, honestly.
00:27:06
Speaker
fun for me to admit to. It sounds really juvenile, but it's true. It was really, really hard for me to learn. I think maybe I knew it as a small child and then I forgot it in the age of credit cards, maybe something like that. And for kids to understand what they want and what they need most. We personally, I love your approach to
00:27:25
Speaker
letting kids pay for clothes and those sorts of things as they get older. We have not done that yet. We don't have anybody that can get an actual job, but I'm ready to start that with my oldest because he's starting to care about what he wears and I don't want to buy the name brands.
00:27:41
Speaker
I'm thinking even if I give him the money, but he has only a certain allotment, right? Like I'm only giving you $50 for this next six months or something. You have to figure out how to stretch it. Patch up old pants or whatever. Just so many ways to make them more resourceful.
00:27:58
Speaker
Sure, sure. And then we have also done a lot of just informal chats when we go to spend things. So it obviously costs a lot of money for our family to do anything together. We go out for pizza or go out to dinner or we
00:28:13
Speaker
go to the movies or like a trampoline park or something, it costs a ton of money. And my kids a while ago, we hadn't really opened up this discussion until one day they asked to go to this trampoline park that's really popular here with their cousins. And I added it up. It was going to cost $80 to get my kids in this place. And so I sat them down. I said, guys, here's the deal. We got a big family. We'd love to do this. It'd be so fun. But this is what it's going to cost. If we do this, that means
00:28:43
Speaker
These are the things that we usually spend our money on, pizza night on Fridays, or we were thinking about going and renting a paddle boat together, et cetera, et cetera, et cetera. What are we going to give up? And allow them some choice. That is so powerful for a little kid to say, huh, what do I want more? And they can totally influence the family spending by coming to a consensus on what they want to spend the money on. And I just think that that
00:29:09
Speaker
has really, really enabled my kids to make better choices and to be okay saying no. We're going to say no to that right now because we'd rather have this.
00:29:17
Speaker
Yeah. Yeah. We have some friends who also have a big family and I just love what they do. They take a trip every year somewhere with their big family and the whole family works together on saving toward this goal. And the kids actually get, you know, quite, they get into it and they're like, no, mom and dad, nope, we're not going to do that because we want to go to, you know, Missouri this year or whatever. I love that. Thank you.
00:29:44
Speaker
Yeah, the kids are like policing. Nope, mom and dad were not. I love that. You know, I don't think I've given my children enough opportunities. Like we mentioned in the how to afford kids, our family's been really blessed with, you know, some positive financial situations. We're, you know, not wealthy, but we have
00:29:59
Speaker
enough for our needs. And I think by sheltering my kids in the past from those difficult decisions, I've taken away the opportunity for them to learn. I will say this, that as difficult as it is to say no to your kids because you don't have the money, I think it's twice as difficult to say no when you do have the money.
00:30:18
Speaker
because it's a matter of principle and that just hurts. You're sitting there, you know, you know you can afford it, but you know that it would not be good for your child if you just gave it to him. So we feel you parents, either way it's tricky, but that concept is tough for me.
00:30:34
Speaker
Yeah, I was thinking about this when I was preparing for this episode too. Okay, so one thing my grandparents did for all their grandchildren was to give them a certain amount of money for college or for whatever they wanted after they graduated.
00:30:49
Speaker
And I was thinking about how extremely grateful I was for that because I could attend college, you know, like worry free, no problem. But I was thinking about myself personally, like, did I appreciate that as much as I do now and being thinking about, you know, being a grandparent someday and thinking about wanting to, you know, bless others with with something financially, you know, a financial gift and then thinking about
00:31:18
Speaker
But wanting also wanting them to have the initiative and the drive to make money themselves, to be able to gift it to their grandchildren and just thinking forward in the future like that. And it's like a balancing act between making life easy for people and making it so they have to get it themselves and they appreciate it more. I don't know that I'm expressing this clearly the way it appealed to me, but trying to be both thankful for what I was given and also
00:31:47
Speaker
give my kids the hunger for it themselves. You know what I mean? Yes, that is a very fine line, I really think. And when you're talking, I thought it's almost the difference between making life easy or making life valuable, you know? And it's not that a child can't really truly enjoy their life and be grateful if it's given to them, but there's something that they miss out on. So I remember talking with someone about
00:32:14
Speaker
Someone older than me about kids who earned their way to college, and for people in my church, many young adults go on these big mission trips for like a year and a half or two years, and it costs a lot of money. We pay our own way.
00:32:30
Speaker
And so those are kind of the two things that most kids have to save for. And this person was telling me that in their experience, they had seen that the kids who saved for their mission or their college and were paying their own way were like twice as hard of workers.
00:32:48
Speaker
I was like, oh, wow. That really says something like they were the ones that had scrimped and saved to get there. And it was almost like they were valuing their experience so much more because, you know, and again, not to say that because you didn't pay for college, you didn't really appreciate your college. I had help in college and I feel like I really appreciated my education, but there's just something extra that kids get when they get their own way. Yeah, agreed. Extra education. Yeah.
00:33:18
Speaker
Okay, and now the allowance questions.
Allowance and Responsibility Approaches
00:33:20
Speaker
So in our family, how we handle allowance is we don't give our kids an allowance. We just don't. We don't want them to
00:33:33
Speaker
get a free ride. We want them to think about, I think I've explained pretty well in the how that we want our kids thinking about money. And then just to turn around and hand them money just isn't following all those concepts that we're trying to teach to them. So we don't give our kids allowance just for being our kids. They don't deserve it. You're so cute. We'll get $5.
00:33:55
Speaker
And again, we want to talk with them about consumption versus production. So they do, you know, they can earn money. So if, for example, we have something that we were going to pay somebody to come do, we'll say, OK, kids, we're going to we were thinking about paying somebody to, oh, you know, say build five rabbit cages for us. If one of you wants to earn that money that we were going to pay somebody else to do instead,
00:34:22
Speaker
submit us your plan, submit us your idea and let's, you know, you can earn that money instead of giving it to somebody else. And then they get money for birthdays, you know, they get cards with money and that kind of stuff. And then we try to teach them how to handle and manage money when it comes in like that. But just giving them a weekly or monthly or whatever allowance, that's just not part of our vision for our kids' financial education. So nope, we don't do allowance.
00:34:49
Speaker
Yeah, I love what you said and we did not do any allowance for a long, long time. Same reason. I was like, I'm not giving my kids money just for nothing. But then we did shift our thinking a little bit a few years ago and it's worked really well for us. So I'll share what we do now.
00:35:05
Speaker
Now, so what was happening was I wasn't giving my kids any money, but because they were still too young to like go out and work for anybody else, they were still asking me for jobs to earn money all the time. And then it was like this big dilemma like, well, how much should I pay them for this or that? And it was often chores they were supposed to be doing anyway. And then we'd go to the store and they'd be like, can I have gum? Can I have that? Can I have this? You know, like just little piddly things. And so I was like, hmm, wait a minute.
00:35:33
Speaker
So instead what we do now is we do give allowance and what it is, is it's as many dollars as their age per month. So my 10 year old gets 10 bucks a month, 14 year old gets $14 a month. So it's not a ton of money.
00:35:48
Speaker
But what they do with that is anything that they want that is not food and shelter, right? So if they want a pair of shoes and they still have a pair that fits, that's their money. If they want a pack of gum at the store, that's their money. If they want to, any number of things. In fact, I'm ready to expand it to like birthday presents and other things that keep dinging me.
00:36:13
Speaker
So the reason we do that was just to simplify any extra little expenditures. So we look at it as Luke and I look at our own money. So for example, in our own finances, we've each given ourselves, what do you even call it?
00:36:31
Speaker
Spending money. Yeah, spending money, right? So if I want something that's not a necessity, I pull it from that money. But when it's gone, it's gone. So that's kind of how we look at it with our kids. It can't be taken away. It can't be earned. It's just there. But if they want extra, then they have to go, like you said, find a job somewhere or something. Occasionally, I'll let them earn extra from me. But since I'm already giving them a little bit of pocket change, I don't really do that very often because I hate to be funding everything. Like you want to work, you can go find a place to work.
00:37:02
Speaker
And then also we have, it's not tied to jobs at all. They have to do their jobs no matter what, because what I was finding in the past was they'd say, I'd say, well, you have to do your work or you don't get allowance. And they'd go, well, I don't care.
00:37:15
Speaker
I don't want the money. So they do jobs no matter what and they get the few dollars no matter what. The only exception to this is laundry. I recently gave up laundry because I hate it. So I wash mine and my husband's and the babies and the three big kids wash everybody else's. And I did tack on a few dollars a month if they do theirs and their buddies and put it all away.
00:37:39
Speaker
So, that has worked really well for us. I really don't think there's a solution that is right for everybody, but those are two ways you can look at it.
Resources for Money Management
00:37:50
Speaker
I will say that there are a few cons to giving allowance. One is that entitlement thing like, well, where's my money kind of thing? You know, when I'm like, actually it's my money and I'm allowing you some of it. And then like you said, expecting money without any contribution. And even though we don't give them money because of chores, I am not above taking it away if they're not contributing. So there's that.
00:38:13
Speaker
Okay. So now we have some recommendations for you. Um, and I love exposing my kids to different ideas, different, um, books about money. So, so, um, I love to use the, um, Robert Kiyosaki book, rich kids, smart kid. That is like totally turning them on their heads upside down about money. He's the rich dad, poor dad guy.
00:38:37
Speaker
And then we also have them read Dave Ramsey's book, Smart Money, Smart Kids, that he wrote with his daughter, Rachel Cruz. And then another one that we have around that they read is called Reelionaire. And it's Farah Gray. And he started as a little kid. It's about a kid entrepreneur. And he started and it's his whole story and tips for other kids and that kind of stuff. So those are three books that we really like to expose our kids to.
00:39:03
Speaker
Yes, I love all the Rich Dad books. I think he has just a really cool way of teaching. Those are a great place to start if you as an adult want some more help. Yes, absolutely. And then I will also share, like I said earlier,
00:39:19
Speaker
Dave Ramsey's whole system. He has a podcast. He has books. He has a cash flow system that's very, very awesome, especially if you find yourself kind of drowning. It's a great kind of reset to your finances. And then I'll show the software we use as well. It's called YNAB. It's actually called You Need a Budget. That's what it stands for.
00:39:36
Speaker
And it has been the best budgeting software for dummies. So if you don't have a husband like Audrey's who knows all the finances and knows economics, if you are just a money dummy, like we are, I highly recommend this software. In fact, I think I shared in the
00:39:55
Speaker
how to afford kids that i have a friend who specializes in coaching wine and has lots of cool resources so i'll link to her blog as well and there's just so so many resources out there to give you help if you need help or if you want some tools to help you get some of the stuff.
Audience Engagement and Conclusion
00:40:12
Speaker
Thanks so much for tuning in. If you've enjoyed this episode, we'd be so grateful if you'd leave us a written review on iTunes. If you have any questions or ideas for future episodes, you can reach us at OutnumberThePodcast at gmail.com and find us on Instagram at OutnumberThePodcast. See you next week.