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Kids and Money: Four Steps to Responsibility

Part 1: Kids and Money: Practical Tips for Financial Responsibility

Part 3: Kids and Money: Face to Face with Reality

Talk About Hard Work and Saving Within Earshot of Your Kids

Modeling is the most powerful teaching tool! That’s why it’s smart to let our kids see how hard we must work to earn and save money.

Kids shouldn’t be overwhelmed with our adult problems. Nevertheless, it does them no favors to keep our financial struggles a secret. Have you ever noticed how kids seem to best remember what they think they are not supposed to hear?

One of the most powerful ways of teaching anything is to talk about it with another adult within earshot of our kids.

When their kids are nearby, wise parents talk on the phone with a friend and say things like, “I’m proud of myself. I wanted to buy that new phone, but I didn’t. It was hard to resist, but I need to save money for groceries.”

Wise parents take their kids to the bank with them so that their children can hear them say to the teller, “I need to put money into my saving account, so I don’t spend it on something I don’t need.”

Smart parents take their kids to the store and think out loud, “I wonder if I really need this? Uh… I’d better put it back. That’s too expensive.”

This technique is only powerful if we resist the urge to tell our kids what they should be learning by watching and listening to us.

Love and Logic’s Four Steps to Responsibility

Step One: Give the child a task he or she can handle.

When it comes to teaching kids responsible money management, the first step involves giving them some type of allowance or “practice money” each week. With younger children, an “allowance” of cookies works better than money.

Step Two: Hope and pray the child blows it.

Most folks agree that it’s better for a child to learn money management by eating their cookies too fast at age three than spending their paycheck too fast at age thirty-three!

As we always say, the road to wisdom is paved with mistakes. Mistakes made earlier in life have the smallest price tags.

Don’t fall into the trap of reminding or lecturing your child at this point. Parents who do, rob their children of essential learning opportunities.

Step Three: Let empathy and logical consequences do the teaching.

When Toby ate all of his crackers before “pay day,” did his parents get angry? No! Did they lecture and say, “A graham cracker saved is a graham cracker earned.” No! Did they give in when he threw a fit? No!

With great sadness in their voices, they pointed to the large calendar on the refrigerator and said, “Oh Toby… this is so sad. We give more graham crackers on Wednesday. That’s two more days.”

Because Toby was a normal child, he threw a major fit.

Step Four: Give the same task again.

The fourth step to responsibility involves avoiding the temptation to lecture, remind, or tell the child what he/she “should have” learned from the consequence.

Toby’s parents just kept providing crackers on Wednesdays and Saturdays, the scheduled allowance days. Each week they noticed something interesting. Each week, his little stack of grahams lasted a bit longer.

The Most Valuable Gift

A major long-term goal of Love and Logic is to raise kids who grow up and miss us… rather than our money. Isn’t it sad that some adult children only call home when they’ve run out of money?

There are few gifts we can give our children that are more valuable than knowing how to handle money wisely. Adults who lack these skills live lives full of disappointment and stress. Money can’t buy happiness… but wasting it can sure create a life of sadness!

There’s good news! By following the tips listed above, there’s no need for our kids to live their lives fearing the bill collector.

A good friend of mine was raised with Love and Logic. Reflecting back on her childhood, she often comments:

When we were kids, our parents always gave us what we needed… and expected us to earn what we wanted. 
It seemed like we were always asking the neighbors for odd jobs. I’ll never forget the summer I spent washing cars, mowing lawns, and pulling weeds. 
By that August, I’d earned enough for the stereo I wanted. I’ll never forget the feeling of pride I felt going to the store and paying for it with my own money!

It’s never too early or too late to give your kids the gift of pride!

Learn more about how you can give your kids the gift of financial responsibility in the final part of this series next week!

Find more solutions in our audio Four Steps to Responsibility.

Part 1: Kids and Money: Practical Tips for Financial Responsibility

Part 3: Kids and Money: Face to Face with Reality


Thanks for reading!

Dr. Charles Fay