Helping Your Kids Make Good Cents
In last month's column I talked about how my oldest son Tyler wanted a Wii U for his sixth birthday and how I refurbished my wife's old original Nintendo and gave it to him instead. We felt spending over $300 on a video game system for a preschooler probably wasn't the best move. Tyler's birthday has come and gone, and he still occasionally talks about wanting a Wii U. Especially after he plays the demo version at Target.
Tyler has a "Fat Cat" savings account at our credit union that is made up of about $75 from piggy bank withdrawals. Nana and Pop Pop fund it with change for him. We have a separate investment account for birthday gift money. When Tyler first asked us for the game system, we told him that if he saved up enough money to buy it himself he could have it. We did that knowing that by the time that would happen he'd want something else.
Tyler thought he had found a solution for his lack of cash. "Daddy, if you sell people your gold things they'll give you lots of money for them! I'm going to sell them my gold tee ball and soccer trophies," he explained. Tyler told me how he saw some "Cash for Gold" ads on TV. Is Nickelodeon running them or is he secretly watching Fox News Channel when I'm not looking? I didn't have the heart to tell him they weren't real gold. I just told him they were too special to sell.
Tyler has learned about the connection between work and money, why we must save in order to get the things we want and that Daddy only gets Starbucks on special occasions because it's way too expensive. I read somewhere that kids' money habits are formed by the age of 7, so it's important to start early.
My wife and I are big believers in the teachings of financial expert Dave Ramsey. She's always been a saver; I'd always been a spender. Listening to Ramsey's radio show and reading his books finally knocked some money sense into me. We're currently working our "Debt Snowball" in order to become debt free except for our home. I was excited to recently have Dave's daughter Rachel Cruze on WCCB News Rising to discuss a new book she and her dad have written called "Smart Money Smart Kids."
Tyler already has some of the basic principals she and her father recommend in the book. Cruze says our kids need to learn about working, spending, saving, giving and debt as soon as we can start teaching them. You can start as early as 3- or 4-years-old. Cruze says the envelope system with envelopes for spending, saving and giving can go a long way.
The concept of debt may take a bit longer. Tyler doesn't completely understand it yet. As long as he has it figured before he heads off to college, we're good. I'm not going to let him make the same mistake I did of signing up for a credit card with an APR higher than 20 percent. I don't want him to ever have to sell those "gold" trophies to pay his bills.
This post appears in the September 2014 issue of Charlotte Parent magazine
Derek James is a host on WCCB News Rising, and lives with his wife and two sons, ages 3 and 5. Read more from James in his Daddy Derek blog.