The cashier complimented the little girl on her steadiness while handing out her money and patiently waiting for the change. Even though she was only 5 year old, a sense of pride grew within her and her mother knew this was just the start of a healthy relationship with money.

One of the biggest tricks I used to teach my kids about money (at a very young age) was to give them the cash to buy something, instead of buying it for them.

I was so surprised when I first tried it. My son did a double-take when I handed him a $5 dollar bill and told him that he could use it to buy the toy in which he was interested. He hesitated and I could see him deciding if he really wanted it. The decision had weight to it. In the end, he decided it was worth parting with the money and he handed the cashier at Walmart the bill. She looked at him with a big smile and gave me a compliment on how mature he seemed. I glowed inside.

More discussions about money followed. Every time I drove up to an ATM and withdrew more cash, I always explained very carefully that I had already given the bank my money to “keep safe” and now I was just taking some of it back to use. How would kids not know that the machine is not just a “free money machine” for anyone to use?

When they turned 8 years old, I signed them up for a debit card (through USAA). I put some allowance money into the account and kept the card in my wallet so they wouldn’t lose it. I showed them how I could check their balance on my phone, and let them use it when we went shopping. Eventually, they started putting their birthday and Christmas money into the account, and learned how to shop online to buy small items. They never went over their limit.

When they were 12 years old, they learned how to sell their toys on eBay. The only thing they needed me for was to help them package the item and drive it to the post office for delivery. More money was added to their debit card this way.

My 12-year-old son also blew my mind. He teamed up with another Middle School friend whose father was a successful entrepreneur, and the two worked together after school starting their own online business. They would find people on Craigslist who needed logo work done and give them a quote of $200. They would then find a service in India or Pakistan to produce the logo for $75. Instant profit and a nice way to earn money to buy more computer equipment and video games!

As my kids got older, I transferred a consistent $20 weekly allowance onto their card until they got a job. The consistency required them to budget their spending if they had a special purchase approaching.

Once they got a job, they were on their own. They had the ability to deposit checks into their bank account, check their balance, and conveniently use their debit card for in-person and online purchases. If they ever needed extra money, I either gave them a boost or issued them a loan with a reasonable payment plan.

I also got to the place where I would give them money to run my errands, like grocery shopping or picking up a prescription. It was perfect when they just got their license and wanted to enjoy their new freedom.

So here are my tips for teaching kids about money:

  • Give them cash to buy something, instead of buying it for them.
  • Teach them how banks and ATMs really work.
  • Get them a debit card and use it for their allowance.
  • Teach them how to use their phone to check their balances.
  • Be consistent and reasonable with your financial assistance.

Do you have any others to share with the community?


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