Teach Your Children (To Budget) Well

It’s Sunday morning. I send the kids to the store for juice so we can make popsicles. Off they go, my nine-year-old hooking his keys onto his belt loop, my six-year-old holding a Lego figurine in each hand. They’re excited, even though it’s chilly outside, and the store is a ten-minute walk. They’ve taken $2.25 for the juice (we’re in Canada, where things cost about eighty-nine times more than they do in the U.S.), and I’ve instructed my eldest to choose the brand with the best price. I’ve also asked him to please bring me the receipt so I can track it properly in my grocery category.

But the reason they’re so excited isn’t because their mum trusts them enough to walk to the family-run grocery store five blocks away, or because they get to have popsicles later today. No, they’re stoked because each of them has some extra change jingling in their pockets. Along with my juice money, I let each boy take a little bit of change from his “Spend” category to blow on whatever he wants. Chips, gummies, an Aero bar – as long as they can pay for it, they get to make their own choices today. (I don’t encourage them to blow their spending money on candy, so today is a rare treat.)

Here’s why I’m excited: because I am teaching them the skills they’re going to need to manage their money as they grow up. They hear me talk about the budget whenever we go out to shop, and they sometimes see me entering expenses into the spreadsheet. (They’re also acutely aware of how much is left in the “Books and Toys” category at any given time!) They have their own version of YNAB in the form of a piggy bank that’s divided into four sections: Save, Spend, Donate and Invest. Each boy is required to allocate his weekly allowance among these categories. So my nine-year-old, who gets $9 a week, splits his money in a way that puts the bulk of the cash into Save and Spend, leaving a bit for donating and investing. My six-year-old does the same on a smaller scale. For now, I’m having each boy put the same amount into Save as he puts into Spend. I hope it’ll stick, because if it does, they’ll be in a lot better shape financially than I was once they reach adulthood.

Do I save half of what I earn? Pff. I’m a single mama making a living as a freelance writer and editor. I’m only able to save a fraction of what I earn. Retirement and travel are the two funds I sling any extra money at. (I’ve given up on real estate.) But YNAB empowers me to manage my short-term savings: the expenses that I know will inevitably come up – office expenses, keeping my teaching license up to date, school fees, disability insurance and paying for the boys’ music and swimming lessons.

One of the reasons people get into trouble with money is that they haven’t been taught how to handle it from a young age. It’s essential to get your kids on board as young as possible, so they learn the value of a dollar – and so they witness the value of saving. Every day presents a new opportunity to educate my boys about whether a given item is worth the money it will cost to purchase. Every trip to the toy store offers a forum for discussing whether they should spend the few dollars they have in hand right now to get a cheap item that they didn’t even want when they first arrived, or whether they should perhaps wait a couple weeks until their Spend has reached the point where they can afford the item they do want.

Today will be a lesson, too: because each boy took a few dollars from his Save to blow on junk food, when next week comes and they’ve got their eye on a special something, they just might realize that they perhaps shouldn’t have bought the candy, after all…maybe they should’ve held off on that impulse-driven purchase and saved the money for something that will last a little bit longer, instead. This morning’s exercise is valuable for exactly that teaching. These are the nickel-and-dime purchases that drain us all, right? Kids do it at the candy bar level; we do it at the grande caramel macchiato level. If I can help my kids see the impulsive nature of their spending urges, I might be able to head off future fiscal heartache like my own. (Wait. Did I say fiscal heartache? Sorry. I mean complete and utter fiscal trainwreckery. But I’ll save that for another post.)