Let your kids make money mistakes

 As published in The Richmond News, November 4^th 2009

“It is a good price, Mommy, but do you think it is good quality?”  My six year old is standing in the dollar store holding a small plastic toy in his hands. His comments get raised eyebrows from the older woman in the stationary aisle but I am proud of his growing financial savvy. Money matters, and our kids...

need to learn about it.

A recent RBC/Ipsos Reid Poll found that 1/3 of Canadians are saving less than they have in the past. It is no surprise, as many of us have never any formal education around this critical area of life. I want my sons to leave home with strong financial habits so they can avoid the credit card debit and poor saving habits that plague so many.  

When my eldest turned five I decided it was time for him to start getting an allowance. I know some families insist on allowances being tied to chores, but no one pays me to cook each night and everyone is just expected to help out in our busy household. Besides, what would I do if he said “forget the allowance, I don’t want it anyways…I am not doing those chores!” My goal is to give my boys control over some money so they can make mistakes now, while it is cheap, rather than later on when the lessons will be much more costly.

And lessons there have been. In our house, the children get 50 cents per year of age, which doesn’t buy much. Every week both boys have to put a coin in the charity jar, and a coin in their long term savings bag (which goes into their bank accounts every few months) and they are left with just a little to spend. At first, both boys would spend their money as often as they could on what ever they could afford.

But the dollar store toys broke and the candy was soon eaten, and there was never enough money for the desired larger toys. I had a few tearful days in the toy store aisle as the reality of “you don’t have enough money” sank in. But then the idea of setting a goal and saving for something started to make sense.  “Don’t take me to stores”, my oldest would plead. “I don’t want to be tempted”. And when he finally saved enough for the coveted Transformer toy, I have never seen him happier.

My sons now know the names of the coins, and discussions about how much things cost have become a regular event in our household. We have even talked in simplified ways about loans, interest, mortgages, and salaries, and although they don’t full understand, there is no rush. I have another 10 or 20 years to cover it all. At least my four year old finally gets that bank machines don’t give out free money.

When not helping her sons make change, Sarah Dakin can be found helping other moms stay on track with what matters. You can reach her at sarah@babystepscoaching.com