This is a guest post from Christian Treitler, and a preview of what’s to come as I turn my attention to kids and family over the next few weeks. Christian is developing MoneyObedience.com, a virtual financial coach that uses plain English to interact with its users. He also writes a blog linking behavioral finance ideas to personal finance issues. Enjoy today’s guest post!
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The other day I was running a few miles with a woman who I had never met before but whom I right away recognized as a good runner: she ran at a pretty good pace, she had a nice & smooth stride, and she was spitting once in a while. (Many good runners are uncouth during their run.) She told me that she had learned running from her father who was going for a daily run and then did his stretches afterwards ending with 100 sit-ups. She explained that she is following his routine.
You know those parents who say “Do as I say, but not as I do”? Clearly, this is a different lesson than “Don’t do as I say, but do as I do.” Our kids absorb all kinds of things at an early age. But when we lead by example – good example, that is – we’re likely to instill good habits in our children, whether the example is of the exercise, or good personal finance variety. One blogger, Steve over at bripblap.com, wrote in a recent post that he was reading to his baby while the baby was still in the womb. He is probably on the right track. We have discovered that kids absorb stuff even when they are just chilling in the warm fluids inside mom’s belly. Pretty awesome that we can even have an influence on our kids when they are not quite born yet, isn’t it?
Even if you didn’t have good financial habits before you became a parent, becoming a parent may force a new reality on you that gives you little choice but to be more financially responsible and to finally “grow up.” Hey, people have broken worse habits than bad financial habits when they become parents. I know a good many mothers who quit smoking for good when they became pregnant. I also know a few guys who quit running with the boys (and I don’t mean jogging!) when they became fathers.
My wife and I are fortunate that we had pretty good money habits before we became parents to our two little boys. Therefore, it was easy for her to choose to paint a ceramic piggy bank for our oldest son when was she pregnant and out on a craft session with her sister and mom a few years ago. The little fellow in utero did not really understand what that piggy bank was all about, but after he arrived he loved the look of it. It became one of his prized possessions right away – even when it was empty.
Now that he is 4 and a half years old, one of his favorite things is getting some of mom’s and dad’s loose change and putting it in his yellow piggy bank. Of course, his younger brother does not want to be left behind which is why he also has a piggy bank in which he likes to put some coins. (As it so often happens with the second child, he only got a store-bought piggy bank. Poor second child!) It has become such a cute ceremony that putting some savings into their piggy banks gives all of us pleasure. You should see the faces on these little boys when the coins disappear in the bellies of these piggies. I have no idea why they enjoy seeing one of the things that they just got disappear again, but they are happy. And so are mom and dad.
What have we accomplished with this ceremony? I can think of two big things right away. First of all, we can easier explain the idea of money to them. For example, when the four-year old asked a while ago to go to the bank to get some money, we could explain to him that we have to put the money in the bank before we can take it out again, since this is similar to what he does with his piggy bank. It wasn’t hard to teach him that Mom’s and dad’s piggy bank is the big piggy bank building.
The second and probably more important result of our ceremony is that our boys seem to connect money with putting it away. You get some money and you run to the piggy bank with it to save it. They may not really understand the concept of money but they understand what money is for. It is for saving. I don’t know if it is by design or not, but we have not given our boys money to buy candy or Matchbox cars yet which would make them connect money with spending it. We will give them some spending money eventually, but by the time they can make spending decisions their savings pattern will have been firmly established. I am pretty sure that they will not easily spend all their spending money. After all, they know that money is to be saved, right?
Fiscal Fizzle 
A piggy bank seems so novel in the cyber age! But kids usually need something tangible to grasp the concept, and a piggy bank does that so much better than a bank account.
We kind of dropped the ball on this with our kids because the piggy banks they had were so much like toys that that’s what they were used for! So if I could add my two cents, make sure the piggy bank is a piggy bank and not something fancy that provides multiple uses! Kids are pretty stinking creative!
What we’re finding to work now–believe it or not–is wallets. By middle school, they liked to carry wallets, and of course wallets look and “feel” better with money in them. That’s gotten them back on the saving money track.
.-= Kevin@OutOfYourRut´s last post: OutOfYourRut Friday Personal Finance Round Up #3 =-.
It’s funny because I just wrote a post on my blog about this too. I have a three year old little boy (and a 10 month old girl, but she doesn’t do this yet!). We have three separate piggy banks.
One is for saving, one is for spending, and one is for giving. At first we tried letting him choose how much to put in each one, but he’s still getting all the names of the coins right, so we help out.
It has been an excellent experience, he is starting to understand why saving is a good thing. He told me the other day that he wants to save up to buy a spaceship.
I asked if it would be one he could play with his action figures, and he said, “No momma, a REAL one. I’m an astronaut. It has to be REAL.” I guess it’s good that he starts saving now!
.-= Jaime @ Eventual Millionaire´s last post: How Do Young, Inexperienced, Poor Entrepreneurs Make a Million? =-.
I have a small little gimmick that I’m setting up for my nephew at the moment. It’s called the ‘help a whelp foundation.’ In person, I work on having him saving his change. But I also try to get my brother/his father to encourage that, given his more common presence. I’m also driven by my rather big lack of faith in currency at the moment, but I’m also driven by getting my family to start their own investment portfolios as well. The goal is to get them invested into a good portfolio consisting of blue chips and silver. As they get older, I’ll be introducing them to penny stocks as well.
It’ll be fun. >;3
I’ve found that letting my child use their piggy bank as a “real” bank has been an incredibly valuable way to teach them about money management.
For instance, we’ll ‘borrow’ small amounts of money at a time…50 cents here, 2 bucks here, etc. Then we help them figure out our “interest” (pick an easy round number here – 10% works well for both of our brains!).
This has been an extremely effective way to teach them 1) The value of saving and the power of letting your money work for you…and 2) My little girl can do better arithmetic than her daddy!