By: Steven J Weil, PhD, EA, President RMS Accounting
School Won’t Teach Your Children About Money. That’s your job as a parent, and if you fail at it, or just
avoid it, your children will lack the skills to be successful adults. Worse
yet, they might just end up living in your house until the end of time.
When do you
start teaching them that money is a tool and how to deal with it? For my wife
and I, the lessons started early when our children were in elementary school.
In those days, money was tight and we had to spend wisely, which meant the kids
could not have everything they asked for every time we went to the store. We
needed a way for them to understand that buying things was about choices.
was the creation of the “Bank of Mom and Dad.” Each week they got an allowance,
and it was deposited to the Bank of Mom and Dad. We kept running balances for each
child, and when they wanted us to buy them something at a store, we would tell
them how much they had in the bank of mom and dad. If they had enough, they
could buy it with their money. If not, they could save up for it, and buy
it when they had enough money.
interesting development was that often, if they had to spend their own money,
they did not think it was worth it. This had never occurred to them when they
were spending our money.
years the amounts they received increased, and they had chores to do in order
to earn some of the money that ended up in their accounts. At age thirteen, we
opened real checking accounts for them. They could not sign, of course; but
they had checkbooks and had to keep track of how much was in their account as
well as learn to write checks and record them. They also became responsible for
more of their expenses, such as school supplies, school lunches and other small
I will never
forget the look on my oldest son’s junior high school band teacher when she
told me that he needed a band uniform and the cost was $25.00. I told her
that he had his own money and that it was his responsibility, not mine. She
looked even more surprised when the kid got out his checkbook.
children learned early about money, and they did not all learn at the same
rate. My oldest saved his money and bought a TV for his bedroom while his
sister, just a year younger, bought toys and junk until she realized that she
could not buy a TV since she had not saved her money.
All three of my children are now self-supporting with high credit
scores and their own homes. They range in age from 24 to 31 and understand the
importance of work and money management.
All three went to college on a budget where they controlled
their own money (and some that their parents contributed) so they had to make
tuition payments, pay for housing and food, dating and other personal expenses.
They knew that running out of money was not an option. They were expected to
budget for their expenses, and they knew how to do that.
I am proud of all three of my children and hope that they
will pass on the knowledge they gained about money to their children. I know
that the ability to deal with money is one of the best things I did for them,
and it gave them a skill that many of their friends don’t have.
If you want to know more about The Bank of Mom and Dad drop
me a line at steve@RMSAccounting.com.