Current economic conditions are a concern for everyone. It’s a time when parents are watching household budgets closely and wanting their kids to do the same. Having been a kid during the Great Depression, I know how difficult it can be for families. Teaching kids the money management skills they will need later in life is the goal of many parents. How can Love and Logic parents teach kids fiscal responsibility?
Love and Logic teaches that kids learn best when they make mistakes—and they often make mistakes with money as they are growing up! We believe it is far better for kids to learn from poor monetary decisions when the price tag is relatively small and affordable, rather than when they are older and the financial consequences can be devastating. Below are contrasting situations with money at different stages of life—which situation prefer for your child?
- Not having enough money to buy a toy car
- Not having enough money to buy a real car
- Defaulting on a family loan and having a bike repossessed
- Defaulting on a bank loan and having a car repossessed
- Saving money early and often
- Saving money late and sporadically
- Making financial restitution for unpaid bills to Mom and Dad
- Making financial restitution to a credit card company or collection agency
Let’s consider the approaches to teaching kids about money from two sets of parents. One parent brags, “We follow all our lessons about money to the penny with our two children. They know not to spend any of their money without our presence and prior approval.” Another parent says, “What a great day! Kim forgot her lunch money today and had to beg off her friends. That’s the second time this week! With all these mistakes and consequences, she’ll have a Ph.D. in life by the time she graduates!” Which child will be better prepared for a financial life full of wise decisions? Our bet is on Kim.
Like Kim’s parents, we believe that parents should let kids experiment with money by:
- Allowing kids to make mistakes and learn from them
- Allowing kids to make their own earning, saving, borrowing, and spending decisions
- Allowing kids the opportunity to make better choices, or not, and experience the financial consequences.
If this is a benefit, forward it to a friend. Our goal is to help as many families as possible.
Jim Fay