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Raising a Deal-Seeking Kid

by Tara Kuczykowski on September 24, 2009 · 19 comments

teaching kids about moneyPhoto by Matt McGee

The following is a guest post from Jean Chatzky:

Being a financial reporter (not to mention a mom to two teens), I know the importance of teaching kids the value of a dollar. Teaching kids money management at an early age, as well as instilling in them the importance of a “good deal,” will help them later in life when the time comes for them to be on their own financially.

Here are some of my favorite tips for raising a financially savvy, deal-seeking kid:

Put the Money in Their Hands

Some families don’t believe in giving allowances to kids, but I do, with certain restrictions. If you’re going to give your kids an allowance, make sure it comes regularly each week -- like a paycheck -- so they can start to budget for things they’d like to buy or goals that they’re saving for.

Parents usually give $0.50 or $1.00 per week in kindergarten and then give a raise of $0.50 or a dollar each year. This will fluctuate, though, depending on what you expect your kids to pay for. At ages 6-8, they might be responsible for paying for their own candy. At around ages 10-12, you might expect them to pay for movie tickets or trips to the mall food court with friends. If you’d like them to start putting away a portion of their allowance each week to a college fun, or give away part a percentage to charity, you’ll probably want to give them a little more.

The Basics of Budgeting

Once they’re making their own money, whether it’s from an allowance, babysitting, etc., teach them the importance of budgeting. One of my favorite strategies is the envelope approach. Give your kids a series of envelopes and have them label them according to the different things they plan to use the money for. For example, they might have envelopes labeled spend, save, charity, etc.

Let Them Shop

Once a month, sit down with your child and make your grocery list for the week. Then, let your kid do the sleuthing for coupons. Give them the Sunday paper and let them clip away, or direct them to the Internet where they Google coupon codes. Take your kid on the shopping trip (coupons in-hand) and after you’re done, show him or her the receipt with the breakdown on how much you’ve saved.

Set a Good Example

One of the biggest pitfalls parents encounter when trying to raise a money-smart kid is not practicing what they preach. If you’re talking to your kids about the importance of budgeting, saving and the value of a dollar, you’ll want to convey that in your own actions. If your kids see you dealing with money choices responsibly in your own life -- for example, if you’re shopping for a new car, you might tell them while you’d love to have a brand new BMW, but you can only afford the Toyota, so that will have to do -- they’ll have an easier time making decisions like these and dealing with the fact that they too can’t have everything they want when they want it.

What steps are you taking to raise a deal-seeking kid?

Jean Chatzky is financial editor for NBC’s Today Show, a columnist for More Magazine and the author of "The Difference." She blogs daily at www.jeanchatzky.com.

{ 19 comments… read them below or add one }

1 Monroe on a Budget September 24, 2009 at 9:22 am

One of my frugal blogging friends has her teen daughter so well trained on shopping for bargains that the kid is frugal blogging too!

Mom's blog: http://marilynsmoneyway.blogspot.com/
Daughter's blog: http://kristiekaysway.blogspot.com/

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2 jon September 24, 2009 at 9:59 am

I've actually started this with my son (he's 2 1/2) and its a lot of fun.

He has his own coupons (a combination of expired ones, and one's he's made himself) and he even made himself a coupon organizer. He goes to the store with me and we discuss what were buying and he helps put in the cart.

He doesn't get an allowance per se, but he does get pennies, which he can use at the store (granted I subsidize it for him, ).

It has actually made shopping with him easier. He doesn't take things of the shelve without asking about it, does melt down when I say no, and when we hit the check out he knows that he needs to pay for things (candy) before taking (eating).

At home he'll gather up coupons, get in his little car and "drive to the store" (the pantry). He'll pick out what he wants to buy and pay for it, then "drive home".

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3 Marla September 24, 2009 at 10:50 am

I don't believe in giving kids allowance. Although we do use the Dave Ramsey set shown in the pic. I don't think allowance teaches kids about the real world. We have to work hard for our paycheck, so my kids have to work for theirs too. The Dave Ramsey system pays kids for chores that you set. You choose the chores and pay. They get their money based on how hard they work. Just like in the real world. No free handouts. They also give part of their money back to God, and save some for bigger purchases. I LOVE the set, it has envelopes for everything. It works really well. I would highly recommend it!!

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4 Michelle September 24, 2009 at 11:14 am

I agree with Marla. What good is a system that just hands kids money? They learn that mommy and daddy will just give them money without earning it...causes confusion when they get older and expect them to just give them money. What would kids need to buy when they are so young anyways? I never had an allowance. If I wanted to go to a movie, my parents gave me money. I had a paper route when I was young and I also grew and sold pumpkins, babysitting when i turned 12. I worked hard for my money. Let's give kids responsibilities (if they are old enough to spend money, they are old enough to have responsibilities that go along with it) before we fork over money to them. Giving them money without working for it teaches them nothing.

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5 jon September 24, 2009 at 11:43 am

While there are some that think of an allowance as "free money", there are many others that think of an allowance as money earned.

The pennies my son gets are for good things he does. Picking up the playroom for example.

When he's old enough he will have weekly chores, and when they are completed he will earn his weekly allowance.

That sounds pretty real world to me!

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6 rebecca meyers September 24, 2009 at 11:49 am

I agree with you john. My son who is 3 1/2 dose chores every day and at the end of the week if he did all of his chores every day ( we use A sticker chart) he get's $2.00 , he is alowed to spend $1.00 and he put's the other $1.00 in his piggy bank. If he dosen't do his chores then he dosen't get any money. He works for his money!!!

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7 mewithoutdebt September 24, 2009 at 12:17 pm

I cannot emphasis how important it is to "Set a Good Example". Kids do learn from you.

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8 dana September 24, 2009 at 12:39 pm

My son saw my paycheck once and thought we were rich...I don't make that much but to him it was huge. I decided to have him help with the bill paying that month. He quickly realized that paycheck he thought was so huge disappeared really fast on things he didn't even think about.....like utilities, house payments, groceries. I also found that if I give him a clothing budget he is much more frugal than even I would be when he feels he is spending his own money......He even haggles with the sales people!
He still has the gimmes, but the arguments are settled a lot faster when I say, "Let's pay the bills again!"

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9 Frugal Rocks September 24, 2009 at 12:55 pm

My husband and I have been huge Dave Ramsey fans for years and because of his principles we are debt free. One day when we have children, we will be using his kit for children!

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10 Jan September 24, 2009 at 1:13 pm

My son and I started playing "supermarket math" when he was a toddler. First he had to match the coupon picture to the item in the supermarket. We'd talk about the price of the item, whether generic was cheaper than brand-with-coupon, and unit pricing (sometimes bigger sizes aren't better deals.) Later I showed him how to read the supermarket circular and determine what's a bargain. Now that he's a teen, he's my "recorder" when we shop. We use a spiral notebook to record items and coupons used, and determine what we'll pay at checkout compared to the value of what's in the cart. He gets to see firsthand how much we can save by budgeting and careful shopping, which frees up money for other things, like the occasional Dairy Queen splurge!

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11 DebbieP September 24, 2009 at 1:36 pm

Dave Ramsey has he best down-to-earth advice for money management, and he lives it. You really can change your family tree(as Dave says) by doing his Total Money Make-Over-your kids never have to know debt like most of us have grown up with. Debt is the norm in today's society-unfortunately, you cannot build wealth that way.

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12 Somie September 24, 2009 at 3:06 pm

I am not a mom but I do agree that every parent needs to teach their kids how to manage their money! That's the most important lesson a parent can teach their kids.

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13 Renae @ Madame Deals September 24, 2009 at 5:20 pm

My three year old knows what coupons are and knows to look for sale items. He is pretty funny! For his birthday I got him a shirt with Woody from Toy Story on it. He loved it! As he was trying it on he said "Did you get this on sale, mom?" He knows his mom so well!
He also helps me sort my coupons. When we do major sorting of coupons he says "We are having a coupon workshop!"
I also take him to yard sales. I let him pay for the items he wants.

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14 mari September 24, 2009 at 5:55 pm

I also think that kids should earn their money.My kids have chores they need to do and thats including homework ,getting ready,leaving house on time,and behaving at school as well.On sunday night if they have done everything they will get their money. My 9 yr old gets $5.50 we split it 3 ways: saving ,spending ,saving for something they want ex:video game.My 6 yr old gets $3.00

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15 mewithoutdebt September 24, 2009 at 6:03 pm

Interesting article in NYTimes "For Kids, a Chance to Learn Millionaire Habits" on kid financial camp at http://www.nytimes.com/slideshow/2009/09/20/business/0920-BACKDROP_index.html

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16 Serendipity is Sweet September 24, 2009 at 8:18 pm

Great tips. This was a helpful post and I shared it on fb.
Thanks :D

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17 Laura - Frugal Friends in Northern Virginia September 24, 2009 at 8:43 pm

Thanks for a great guest post on teaching your children to be financially savvy! I agree on its importance!
I recently found my old 8th grade Civics Class "Budget Project" and it made me laugh so hard...I budgeted more for clothes for a month than for food! It was not just comical, but a huge eye opener that I need to train up my children to be much more financially savvy than I was as a kid! I did a blog post on it here: My 8th grade budget project

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18 The Leonards September 24, 2009 at 8:52 pm

I think allowance is a good thing for kids. I am fairly young and while growing you with 4 other siblings, my mother gave us $5 allowance each week. We had daily chores. Whenever we got report cards, we got a set amount for each A we had. I think that prepared us for the real world and taught us the value of money. It taught us to work for the things we need and save for the things we want.

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19 BK September 25, 2009 at 1:35 pm

I read about a mom with a cool strategy a while ago (sorry, but I don't remember where I read it - it may have even been a DSM link!). She said that she didn't have time to clip coupons, but made it a game for he son/daughter. She'd give her child a list of groceries she needed & they'd have to find the coupons (using sites she'd bookmarked). Any coupons they found for her, they'd get to keep the money for. If they found a 50 cent coupon for the bread & a $1 coupon for the crackers needed, the child would get $1.50. I think this is a really neat system. The kid learns great strategies and mom has an easy system of 'giving' her child money withougt just 'giving' it.

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