Are Your Kids Money-Savvy?

Fifty percent of marriages in the United States end in divorce. And money is amongst the top five reasons for divorce in our nation.

My husband and I both come from divorced parents who, like so many couples, argued about money. We wanted to do things differently so we decided to go to financial counseling before getting married in 2001. We decided to take the preemptive attack on the issue of money before the checking accounts, income and debt were merged. Thanks to my mom we found an amazing counselor who charged us about $150 for a one hour consultation and we began seeing him once a week. The process was amazing and I recommend it to anyone planning to get married or already married.  

After seeing our counselor David, once a week for about two months he told us we were doing great and we decreased our visits to twice a month and later to once a month. After about a year he told us we were ready and though we begged him, he wouldn't take our money any more. 

Because of David's teachings and help we were able to pay off almost $100,000 of debt we had both accumulated before getting married, in less than three years. Most importantly, we are financially healthy. Money is not something that we have ever fought about. It's not an issue in our home and going on 11 years of marriage, I believe it's a huge feat. 

We want our children, Camila and Mateo, to get off on the right foot way before marriage. We don't want them to owe $100,000 by they time they're 24-years-old like we did. Teaching them about money is important to us and something we started doing last year when they were three and two-years-old. We got them interested by giving them coins and having grandparents and aunts give them coins every once in a while to save up for a toy. Once they bought a couple of small things I started taking them to Target and the Disney Store to "shop" for their next goal. I also bought them piggy banks made by Money Savvy Generation, which are awesome because they are separated into four different sections: Save, Spend, Donate, Invest. The piggy banks are see-through so our kids can see how much they're accumulating and once a section is full we empty it, count it, give them dollar bills and take them to the store if they want to buy something. 

This little piggy is helping us teach our children what my husband and I had to pay $150 an hour to learn at the age of 24. No wonder it has won the Parent's Choice Gold Award!

Once we had the piggy banks, my husband and I explained to our children that they would not be getting toys except for birthdays and holidays from us and that if they wanted to buy something they could save up for it. 

We give them a coin for going to bed quietly (they share a room and have in the past stayed up talking until midnight!) and for taking a nap. They get a sticker and a coin for each night they go to sleep quietly and when they have 6 stickers in one week, they get a dollar. (I up the price when we're on vacation $1 per night, $1 per nap, $2 per 6 stickers). 

We also talked to them about the sections that are not so clear to a little one's mind. For example, we tell them about how exciting it is to go to University and learn many things, about giving money to people who don't have any to buy food and about setting up a business like grandma. 

I have been absolutely amazed by their level of understanding, maturity and self-control! Some of their purchases have included a $40 Lightning McQueen race track, a $35 Buzz Light Year, a $35 doll, a $21 Dinosaur, four $16 stuffed animals. We visit the stores often and they see many toys they want, but they both keep their eye on their goal and the pride on their little faces when they're handing the money over to the cashier is absolutely priceless! They know they've earned the money and they feel so empowered by getting to choose what to buy with it! 

At the beginning they were saving most of their money for toys but we've been talking about having a bunch of toys and nothing else, and again they've surprised me with their level of understanding. When grandma gave them each a roll of pennies, nickels, dimes and quarters recently, they each, without our coaxing, split the money up pretty evenly amongst the four different sections. They each put a little more money in the "Donate" section because we saw a commercial about children with cleft lip. We are now saving $240 as a family to pay for a child's surgery, based on their request. 

I told them once they have $100 in the "Save" section which is for college, they will get to open a bank account like mommy and daddy! 

Between the two of them they have about $40 saved up in the "Invest" section but I haven't come up with any ideas of what type of "business" they could set up. Any ideas? Please post them in the comments section for us! 

I am so proud of my kids and it brings me joy and peace of mind to know they're on the right road to success and financial well-being! 

I would love to find out what you're teaching your kids about money too. Please share ideas and exercises that have worked for your family! 

Money Savvy Pig (piggy bank) link: http://www.msgen.com/assembled/money_savvy_pig.html