In this episode of ThimbleberryU, we dive into a crucial topic: teaching kids financial responsibility. Jon Gay and Amy Walls discuss practical strategies and personal experiences around introducing children to money management. One of the key points is the importance of teaching responsibility first. Amy emphasizes that kids should learn that some tasks are simply part of being in a family and shouldn't always be tied to financial rewards. When chores are linked to allowances, there’s a risk that children might develop an expectation of always being paid for contributing, which could undermine the value of communal responsibility.
Amy shares how her own family balances this by distinguishing between routine chores, which support the family, and additional tasks that can earn money. This system, which includes "bonus jobs" for extra earnings, teaches kids the value of effort and money while avoiding a sense of entitlement. The conversation also touches on how to engage young kids in financial learning. For example, letting them handle cash or count coins at an early age makes money more tangible. Jon and Amy agree that relying solely on credit and debit cards can obscure the concept of money, not only for children but for adults as well.
One particularly memorable anecdote involves Amy’s son learning to budget while shopping for a food drive. This hands-on experience with a limited budget helped him understand the importance of stretching dollars to maximize value. As kids grow older, parents can introduce more complex financial lessons, such as saving a portion of birthday money or learning to budget for personal expenses like clothes. These lessons can be tailored based on the child's age and developmental stage.
Amy also explains how she uses personal experiences, such as her own childhood encounter with buyer's remorse, to teach her kids about the emotional aspects of spending and saving. In addition, Jon and Amy discuss visual tools like clear jars labeled “save,” “spend,” and “share,” which can help younger children grasp the concept of managing money. For older kids and teenagers, opening a savings account or tracking spending through a debit card is recommended. Amy’s daughter, for example, learned a valuable lesson when she accidentally purchased a video game multiple times, illustrating the importance of monitoring bank accounts and understanding the consequences of online purchases.
Overall, Jon and Amy highlight the importance of being intentional and adaptable when teaching kids about money. Every family and child is different, so it’s about finding the right balance and approach that works for your situation.
Jon Gay (00:07):
Welcome back to ThimbleberryU. I'm Jon Jag Gay, joined as always by Amy Walls from Thimbleberry Financial. How's it going, Amy?
Amy Walls (00:13):
It's going great. I'm looking forward to our topic today.
Jon Gay (00:16):
This is one of my favorite topics. We've touched on it in the past, but it's so, so important — probably, I think if you think about the future, one of the most important things we can talk about, and that is teaching kids about financial responsibility. I know parents often wonder, when should I start teaching kids about money?
Amy Walls (00:34):
It is the common question parents ask: what's the right time? When should I do this? It's similar question to when should I start giving my kids responsibility? I think we start giving our kids responsibility, maybe it's putting their toys away. I was much better at that with my first than with my second.
Jon Gay (00:53):
I'm sure you're not alone there.
Amy Walls (00:55):
And financial responsibility to me (and I know that I do not think I have all the answers in this area) comes after your kid starts to understand responsibility because we typically want to set expectations in setting responsibility, and we don't want someone to think that they should only do things when they are compensated financially.
So, I've heard from people who have tied responsibility to money, that then their kids think, “Well, I shouldn't do anything unless I'm paid for it.”
Jon Gay (01:30):
It's funny, as you were starting today, in my head I was thinking about chores and an allowance to take out the trash, wash the dishes, that kind of stuff, and I can see where that can get dangerous.
Amy Walls (01:41):
And what we do, and again, we are not experts — my kids are still growing. I don't know how they'll turn out and every kid is different.
Jon Gay (01:49):
Full disclosure, I don't have kids. So, take everything we say today with a grain of salt.
Amy Walls (01:54):
These are all ideas. So, what we do in our house is there's certain responsibilities that each person has as a member of our family community, and you just do them because it supports the community, not because you're being rewarded.
And then the kids have a group of jobs that change every so often (not probably as often as they would like) that they help set and they can earn money by consistently doing those on a weekly basis.
If they've done those and they want extra money, then they have the opportunity to do some bonus jobs to earn extra money. But they can't skip their regular job and say, “Well, I didn't earn that, but I just want a bonus job because I don't like my regular job.”
Jon Gay (02:42):
It's almost like overtime.
Amy Walls (02:44):
Let me drag my feet and then get paid overtime.
Jon Gay (02:48):
You got to get the 40 hours if you want the time and a half. And I'm speaking metaphorically here, but yeah.
Amy Walls (02:52):
Of course, yeah. So, ways to get kids interested in teaching them; when they're young, start counting money. Get them interested in dimes and quarters, and knowing what money is and using cash, and even coins sometimes to pay for little things.
If we're always using our credit cards, our debit cards, the concept of money is much more foreign. We need to make it more concrete.
Jon Gay (03:20):
It's true for adults too, not just kids.
Amy Walls (03:23):
Absolutely. Use experiences. Maybe it's your everyday weekly grocery shopping to show kids that money's exchanged for items.
One thing that my son’s school does; they do a fundraiser food collection around the holidays. So, we said, “Look, we will donate X amount of money, and you get to go do the shopping. We are going to give you so much money, a hundred dollars, and you need to go through the store and figure out what you want to buy and donate.”
Jon Gay (03:57):
Next week on supermarket sweep … sorry, anyway.
Amy Walls (03:59):
So, we had some discussions around what products stretch the budget, and I remember last year, he was like, “Okay, we'll do spaghetti. I like spaghetti, most of my friends like spaghetti …” because he was very conscious of, “But we don't want to buy something people don't like.”
He was looking at sauce and spaghetti, and doing the math, and the store had a little tablet. He was writing the numbers down on and tracking, and then we walked around the corner, and there was boxed mac and cheese, and he was like, “Well, wait a minute, I can get a lot more servings of mac and cheese because it's also on sale. It's like 50% off.”
And he was a second grader, and he figured this out and he said, “Mom, we got to go put all the spaghetti stuff away and replace it with all this mac and cheese because it's going to stretch, and people like mac and cheese.”
Jon Gay (04:59):
And you're trying to hold your grin as a proud mom at that point.
Amy Walls (05:02):
I was very proud of him, and he explained at the checkout what he had done and how he had done the math, which was even better. And so, as kids get older, maybe it's introducing topics like saving a portion of birthday money for a specific thing.
One of my kids has their birthday within three weeks of Christmas. The other one, it's about six months away. So, how they end up saving is very different based on the dates of birthdays to holidays, and what they might want later on.
For teenagers, maybe it's introducing more complex topics like allowances go up much more, but they're in charge of buying their clothes from that so that they learn budgeting.
And as we kind of alluded to, every kid learns at their own pace. And so, as parents, I think it's about just being intentional as to what you want to teach, and then applying, figuring out how they can actually see that.
Jon Gay (06:13):
Every parent is different, every kid is different, every family is different. And you've started to get into this area, Amy, but I want to ask you about how do you help kids understand the value of money in some practical ways?
Amy Walls (06:24):
We talked about having kids earn money through age-appropriate chores. I think that's good because kids can then see the connection between effort and earning.
So, my son recently did a bonus job of weeding and he came to me and said, “Hey mom, I know you've been wanting to weed the front beds and put mulch down. I think I could do the weeding. How much would you pay me to do this?”
And I went out and I said, “Hey, I'll pay you X amount.” Well, after about the fifth time, he came in to tell me he was done, and I went out there to say, “What are you talking about?”
I was like, “Alright, here we go. This is going down in price because I have explained all these little bits of grass are weeds that need to be pulled out of here, but I keep finding them every time you tell me you're done. So, you've now taken up my time where I could have done this, so you don't get paid as much because you’ve reduced the value to me.”
And this continued a little bit, and finally, my husband said to him, “If mama gets called out there one more time without it actually being done, you're not getting paid. I realize you probably won't continue to finish it, but you have failed to check your own work now several times and that's not okay.”
Jon Gay (07:54):
Wow, okay.
Amy Walls (07:55):
So, he learned this connection and he said, “Okay, dad, I really think I did it. I think I got it done. Before I call mom out here, will you please come out? But I have checked it, I have double-checked it, I think it is good to go.”
Jon Gay (08:12):
Was it?
Amy Walls (08:13):
And so, then he came back in and said, “Hey mom, I got it.” And sure enough, he did.
Jon Gay (08:19):
I love everything about that story.
Amy Walls (08:22):
So, the other idea that we've used is when they ask for a new toy (my daughter was amazing at this). We'd go on vacation and would forget money each and every time despite reminders. It was so predictable.
We'd talk about how much it costs, and it was always a stuffed animal that they wanted. And if it was $20, great. We get home on Saturday — on Saturday when we get home, you need to remember without a reminder to pay us. For every day that this waits, it becomes a dollar extra.
Jon Gay (09:00):
Interesting.
Amy Walls (09:01):
And so, if you wait a week, you're going to be paying us $27, but you need to remind me. You're taking out a loan from us. We're already making an offer. We'll remind you Saturday when we get home, and we’ll remind you once a week after that.
That helped for my daughter to really tie that price and the value of money together, because by forgetting something, she realized that had cost.
Jon Gay (09:28):
Really eye-opening ways to teach your kids about stuff.
Amy Walls (09:30):
Also, personal stories. The world today is not the world some of us (I might be aging myself) experienced as kids. So, one story I'd share is about my first big purchase or first couple of purchases. Everybody had Cabbage Patch Kids and I did not have one.
And I had money saved, and a store got a hundred Cabbage Patch Kids. I went and I remember my brother was so annoyed because they were in five parts of the store and I'd pick one from one area, I'd walk to the next area, pick which one I wanted, maybe keep the one, replace it. And I did this for like an hour and a half. It was a long time to pick out my Cabbage Patch Kid.
And then I spent the money, bought the Cabbage Patch Kid, took it home. This was at night. The next afternoon evening, I packed up my Cabbage Patch Kid in his box as if he'd never been open, I took him out to my mom and said, “Okay, I'm ready to take him back.”
Jon Gay (10:27):
Okay?
Amy Walls (10:28):
Because I had buyer’s remorse.
Jon Gay (10:33):
Really? How old were you, Amy?
Amy Walls (10:34):
I was in first grade.
Jon Gay (10:36):
If that wasn't a sign of things to come for what you were destined to do for a career, I don't know what is.
Amy Walls (10:41):
I felt like I'd had all this opportunity having the money available to me, and while I'd enjoyed playing with the doll, I no longer had that opportunity and felt like I might be missing out on something. So, it was really more like FOMO.
And my mom talked to me about the doll and how much fun I'd had, and I'd walked it around the neighborhood, introduced it to friends, neighbors, all that. And returning it really didn't make sense. But at that point, you could also do layaway. So, later on, I wanted another Cabbage Patch Kid, and I remember I was like in fourth grade, it was $75.
Jon Gay (11:20):
It's a lot of money back then.
Amy Walls (11:21):
And I got paid like $2 or $3 a week in allowance. My mom drove me to the town, which was not my town, where I had this doll on layaway each and every week until I had that doll paid off.
And so, layaway doesn't happen most places anymore. I don't know of anywhere that does that, but maybe as a parent, you can put something on layaway for your kids. You buy it and they have to pay it off, or maybe make the arrangement with a neighbor or a friend or a grandparent where there won't be giving in.
You can have it now and then just continue to pay me. But they actually have to have the delayed gratification.
Jon Gay (12:01):
I like it. So, Amy, for parents who don't have a child genius like your mom did at home, what about saving? It can be tough even for adults (I can speak from experience there). How can parents introduce saving to kids not named Amy in a way that makes sense.
Amy Walls (12:19):
You give me a little too much credit there, Jag. Making it visual, anything that's tactical, I think. Don't have money be hidden. Make it be out in the open. So, jars, clear glass jars, save, spend, share with them, clearly labeled so that kids can see progress, they can see what's available to them to spend. There's not a question with that.
Jon Gay (12:42):
Do they go next to the swear jar or is that a different topic?
Amy Walls (12:44):
Maybe, actually, I think that's also… swear jar: So, maybe if somebody isn't meeting responsibilities, they're being anti-helpful, we have a jar like this in our house, it's not the swear jar, but there were some unhelpful behaviors to the family. So, it finally got to the place where every time that behavior happened, you're going to put in a dollar in the jar.
And that child's favorite thing is ice cream. There are amazing ice cream shops in Portland. And so, when that jar is big enough, that child gets to take the rest of the family out for ice cream.
Jon Gay (13:22):
Okay.
Amy Walls (13:23):
Using what was their money.
Jon Gay (13:24):
I see.
Amy Walls (13:25):
But your question about savings, really having some short-term goals, I think for anybody helps here. Stepping away from money with any goal, if you set a ginormous goal, it's merely impossible to reach if that's your first goal.
But if you set small goals that incrementally grow or build on each other, a series of small goals, you have a much better chance of succeeding. So, the same thing is true when we apply money. Start with, “Hey, here's a $2 thing you want to buy. Great, you earned the $2, you can go buy it. Celebrate the success of that.”
“Here's something you want that's $4. Oh, let's save $2 this week and $2 next week. Yay, you did it.”
“What's something you want if you save for three weeks?”
It could also be incentivizing same way that our 401 (k)s are matched, in many cases is, “For every dollar you save towards this goal, I will match that dollar.”
Jon Gay (14:29):
Yeah, I like it.
Amy Walls (14:31):
They have incentive, and especially, if it's a bigger goal, they don't have to wait quite so long. Once they've gotten through that visual piece, and for kids who are older, opening a savings account where they can track.
It's pretty hard for a five or six or eight-year-old to really get the understanding of a savings account because it's not visual. But for a teenager where they're spending from their debit card, that works well.
My daughter made a mistake once. We taught her how to buy something online and she came to us and asked us, “Hey, there's this video game I want to buy, can I buy it?” And she'd already proven she knew how to order online, we said, “Yeah, do you want help?” “Nope, I got it.” She ordered it three times.
Jon Gay (15:16):
Oh no.
Amy Walls (15:18):
But didn't tell us. And it wasn't until I was in the bank account a couple of days later and went, “Your balance dropped. What's going on?” And she said, “Yeah, I bought that multiple times because I couldn't get it to download, so I just kept buying it.” And we were like, “Oh gosh, you got to say something right away on that.” And it was past the time we could do anything. But it was a great learning lesson.
Jon Gay (15:40):
For sure. Amy, I got to say it’s such a great topic and we were planning on doing one episode on this. I think there's so much more to get into. What do you say we come back in a couple weeks and do a part two and cover some more pieces of this teaching kids about money?
Amy Walls (15:55):
Absolutely.
Jon Gay (15:56):
Alright. So, while we have you, if somebody wants to come talk to you about their financial situation, their financial future, even their family dynamic when it comes to finances (I know you've dealt with that too) what are the best ways for our listeners to find you at Thimbleberry Financial?
Amy Walls (16:10):
Yeah, they can give us a call at (503) 610-6510 or online at thimbleberryfinancial.com.
[Music Playing]
Jon Gay (16:18):
We'll continue this discussion in a couple of weeks.
Amy Walls (16:21):
That sounds great, Jag. Thank you.
Jon Gay (16:22):
Securities offered through registered representatives of Cambridge Investment Research, Inc, a broker-dealer, member of FINRA/SIPC, advisory services through Cambridge Investment Research Advisors, Inc, a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions.
Securities offered through registered representatives of Cambridge Investment Research, Inc, a broker-dealer, member of FINRA/SIPC, advisory services through Cambridge Investment Research Advisors, Inc, a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.