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Talking To Kids About Money Matters
  • A blog written with parents in mind

Advice From the Expert: Judith Ward Answers Your Parenting Money Questions

Q: My son has been improving his grades at school, and I would like to reward him with some extra spending money. I think the extra spending money will help my son learn financial responsibility, but my wife disagrees. What do you think?

A: That is a great question and something many parents consider. In our 2015 Parents, Kids & Money Survey, we found that 71% of parents used money as an incentive to get kids to do chores, get better grades, and behave well, so it would seem that lots of kids are earning money as a reward in addition to allowance, birthday money, or other more traditional ways.

Regardless of what you and your wife decide, what is important is remembering that you should be having conversations with them about that money. When kids receive money of their own, from any source, parents should be regularly talking to their kids about managing that money through smart saving, spending, and goal-setting.

For example, instead of waiting until your son impulsively sees a video game he wants at the store and buys it on the spot, work with him to create a savings goal. Maybe it's a new video game system. Then, as he gets money, no matter how it comes to him, he can save toward his goal. Periodically, check in with him to see how he's doing at reaching his goal. This will help to give him a sense of purpose with his money and will help you to keep track of how much he has.


Q: Every time I take my kids to the grocery store, they ask for things and it gets quite expensive. How can I teach my kids that money doesn't grow on trees?

A: You're absolutely right that it is important for kids to understand that money doesn't grow on trees, and 50% of parents admit to purchasing things on display at the checkout to appease their kids. Kids need to understand that the items they ask for have an opportunity cost. As kids begin to learn about money, the first thing to teach them is goal-setting. Having a savings goal in mind can lay the foundation for future money conversations in any scenario, including shopping at the market. For example, if your kids have a goal to save for a new building block set, remind them of this goal when they want to get a stuffed animal in the checkout line and help them understand how a purchase now can impact reaching their goal in the future.

Also, find ways to involve your kids in the shopping trip so they understand why you are making those purchases today. Show them your shopping list and walk them through your budget for the store, or look through store circulars and identify how much things on your list will cost. Point out the things on your list that are meant for your kids already–lunches, snacks, or breakfast cereals. This will help them to see that they are already getting things from the trip to the store so they don't need to ask for more.

Once you're at the store, incentivize the trip for them by offering to let them use any money that is left over toward their savings goal. Ask your kids to help you shop, but remind them that you already made the list and you already calculated how much everything would be. As you shop, this will help to keep them focused on only the items on the list since they'll want the leftover money.

By focusing on goals and making a grocery store trip into a fun adventure, your kids will likely be excited to join you at the store, and it may also help to cut down on the number of items they are asking for as you walk the aisles. 

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