Thursday, 25 June 2009

Teaching my children about money

by Eilleen
Consumption Rebellion

I have written before about children and consumerism. Consumerism is alive and well in my children's playground. Children seem to be so much aware of products, brand names, and the power of money.

Readers of my personal blog would know that I have recently started giving my daughter pocket money. I have decided to use pocket money as a means to teach them how to manage money and how to delay gratification for greater gain. I hope by teaching them about money, they are more able to cope with our consumerist culture.

Some background first...

I had decided some time ago that my children won't get pocket money until they are able to recognise notes and coins and and understand basic addition and subtraction (in 1s, 5s and 10s). For my daughter this meant that she has not had pocket money until now - at the age of (in her words) "6 years and 3 quarters" she is finally able to show me that she knows her notes and coins and can add and subtract fairly well.

I had also decided not to tie pocket money to chores. Simple reason is that I just don't see the two of them as related. She (and her brother) have always done chores fact, it was only recently that my daughter realised that what they do are called "chores"!! Both of my children have been doing age-appropriate chores since they were about 3 years old. Its a normal and almost unconscious part of our lives (and I quite like it that way). It also helps me because I can teach her about money without having to think about chores either.

(Note the rest is xposted from my personal blog)

For me, my daughter has "earned" her pocket money by becoming proficient at the very basics of it - the adding and subtracting by 1s, 5s and 10s. Next step for us is for her to now learn how to managing that money. For me, that means learning about financial goal setting, saving and using alternatives.

Financial Goal-Setting

So as a first step, I asked her: "If you had money, what would you buy?" She told me she would buy a stick insect. So I wrote on a piece of paper stick insect, small aquarium and rocks = $65.

Then I asked her "If you had money to buy something little once a week, what would you buy?" And she told me that she would buy food from the canteen once a week (she's currently not allowed to do this). So I got the food list from the canteen and wrote all the foods she would buy and it all added up to $5.

Talking about Saving

I then told her that I will give her $6 a week for pocket money. This meant that she has $5 for the foods she would buy AND have $1 saved over which she can use to save for her stick insect - which would cost $65 after she's bought the aquarium, the rocks etc. This meant she would get her stick insect next year!

Looking at alternatives

As you can imagine, my daughter didn't like the idea of waiting that long for her stick insect. So the clever girl then said "I can look on Freecycle for the aquarium and the rocks....that's free."

She also said that she can get rocks from the garden and wash them, if she can't get those on freecycle.

And even more alternatives

After all this, I told her this brings the cost of her stick insect to $20. Which meant that she can have her stick insect by Christmas instead of next year. She still felt this was too long to wait, so I then sat down with her and said you can save for your stick insect by looking at what foods you can do without in the canteen. I told her she can save money if she brought her lunch from school instead.

She still didn't like this and said she wanted to buy something at the canteen with her friends. I told her that now its a matter of priority and that whatever she decides, that's okay. I told her that she can either wait till Christmas or have fun with her school friends.

After much thinking my clever girl came back and said, "I can still buy from the canteen and be with my friends but just not buy as much so I still can save money."

So I sat back down with her and went through the food list and in the end, she decided that she will just buy the chicken nuggets and not everything else. Instead, she will bring food from home to go with her chicken nuggets.

This meant that she now will only spend $3 a week of her $6 pocket money. Which meant she will get her stick insect in 7 weeks instead of Christmas. This is still a "long time" for her but we've agreed that there may be times when she will decide that she can bring all her lunch one week and so all her pocket money for that one week will go towards her stick insect.

Let's hope she can stick to what is effectively her first budget!! I know that there may be times when she'll slip up but I think saving up to get to $20 is a small enough amount as a first goal.

For now she's just so proud to be a "grown up" about money and I have to admit I've also very proud of her thought processes so far with it.

(Update: on the day of her pocket money, my daughter decided that instead of buying chicken nuggets ($3), she can buy chips ($1) instead. So she has now saved $5 instead of $3 - if she keeps it up, then she'll have her stick insect next month!)

If you have any stories about pocket money, I'd love to hear them!