Kids and Money: Face-to-Face with Reality

Kids and Money: Face-to-Face with Reality

Last week we provided a few practical tips for parents as they start teaching their young kids the basics of financial responsibility.  As kids grow older, they will encounter the realities of money and this provides excellent opportunities to let natural consequences do the teaching.  Here are some ideas that can help you give your child financial responsibility.


Kids suffer from inflation. The cost of learning how to live in our world goes up daily. The price a child pays today to learn about friendships, school, learning, decision-making, and responsibility is the cheapest it will ever be. Learning an important lesson today may be a bargain.

The older a child gets, the bigger the decisions become. Elementary school children make many decisions with affordable price tags. This means they can pick themselves up and try again if things don’t work out. High school students are making life-and-death decisions.  Decisions about fast cars, riding in the back of pickup trucks, drugs, alcohol, and other issues that they face daily.

Some children are given the opportunity to learn at an early age not to antagonize bigger children. The cost of this knowledge is a few minor bumps and bruises. Others, protected from this experience, must learn the same lesson during their teenage years at the cost of serious physical injury, usually at the hands of a much stronger person. I’d rather my child learn at an early age when the price is much more affordable.  It works the same way with money.

I met a parent who likes to loan money to her young children. She believes this is a great opportunity for them to learn about responsibility and the way our banking system works.  She expects the child to sign a promissory note, provide collateral just as an adult would do at the bank, and pay off the loan by a certain date. She is training and preparing her children for the real world.

Recently she repossessed a video game when her son did not pay off his loan on time. She said that it really hurt her to have to take this away.  However, her most convincing statement was, “My son is really lucky. Here he is, only 10 years old, and he knows so much about the responsibility of paying back loans, collateral, and even repossessions. All it cost him was a $29 video game. It was a bargain.”

She added, “My neighbor’s boy learned the same lesson at the age of 26 when the bank repossessed his $2,900 car. My son had a 16-year head start on the neighbor boy. Now he has an additional piece of wisdom to carry him through life.”

Handing the Problem Back

Sometimes we hear parents ask, “My child is no longer a young child, what can I do to help them learn about responsibility?” Let’s hear about a father and his son, Blake.

Dumping his bags on the floor, Blake announced, “Dad, like this trooper gave me a ticket and it’s not fair. He comes up and gets like all belligerent, telling me he ought to arrest me because I was going 30 miles over the limit. I told him, ‘Like lighten up, dude. There’s no one else on the road and it’s like what’s the big deal? I know it’s a work zone, but it’s after hours, man.’ And then he like pulls a real attitude on me. So, Dad, will you just take care of the ticket and not make a big deal out of it? How am I supposed to have a good vacation if I have to go to court and mess with this?”

In the past, Dad reacted to these situations with anger, but had always bailed Blake out. No wonder Blake thought this latest brush with the law was just another minor irritation.  What a shock he got! Dad didn’t get mad. He simply reacted with, “Oh, man. How are you going to solve this? I bet it’s going to cost you a bundle.”

“What do you mean cost me a bundle? You’re the one who wanted me to be home so soon. I’d have to sell my car to raise that kind of dough. Then how am I supposed to get to school?”

“I really don’t know, Blake. If you don’t figure it out in a couple of days, let me know and maybe I can share what some other people have tried in situations like this. The only thing I know for sure is that I won’t be paying for anyone else’s tickets.”

Blake used all the arguing techniques that had worked for him in the past, but Dad held his ground responding with, “I know, and what did I say?” Blake stomped off muttering, “Oh, whatever.”

It’s painful to watch our children learn through natural consequences. But that pain is the price we pay to teach our children. We either hurt as we watch our children learn through life’s natural consequences, or we hurt as we watch them grow up unable to take good care of themselves.

We hope this gives you some additional ideas that you can implement to give your child financial responsibility. More tips on helping teach your kids responsibility can be found in our webinar, Home and School Strategies for Creating Respectful, Responsible Kids.


Thanks for reading!

Dr. Charles Fay

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