How this doctor teaches his kids about money

We shop a lot.

Now I didn’t say we buy a lot. But we spend countless hours on the weekend walking through malls and shopping centers. I’m not sure exactly why. It may be that there is enjoyment in the visualizing without actually having. Or, more likely, as a family of four with two growing children, we have many items on our purchase list to check off.

Inevitably, repeatedly, our kid’s eyes sparkle with some bauble or another that they spy in the shopping isles at Target or where have you. More times than not, our answer is no. They cannot have yet another frivolous toy, or expensive pair of shoes, or the latest electronic gizmo.

While we as parents have become stern on spending, the number of these requests from the kids have not fallen to the wayside over the years.

So my wife, a bit ago, came up with a wonderful idea.

She calculates a weekly allowance for both the kids, multiplies by 52 weeks, and gives them all the money at once. For my thirteen-year-old son, for example, he is given $10 a week or $520 on January 1st.

While we cover basic food and school supplies, my children are responsible for toys, candy or non-nutritious food, and clothes. They have their own bank accounts and must budget accordingly.

While this sounds a bit complicated, it actually is not. The kids have learned quickly the value of things. They understand that they can buy anything they want, but there are consequences. These consequences last the whole year unless they can find other ways to earn money. They are also expected to save a good percent of their yearly “income.” We shoot for 50%.

I can think of a few distinct habits that my children have developed since implementing this method.

They rarely buy at full price.

My kids now love Marshalls and TJ Maxx. They often find their favorite brands at deep discounts. If they see an electronic or gizmo they like, they often check eBay first. They try to squeeze the most out of each penny.

They now spend more on things and less on food.

They quickly realized that spending their money frivolously on junk food was a short-lived pleasure and their enjoyment would only last so long. They now concentrate more on buying things that last or spending on experiences.

They fix things.

My son has become and expert at fixing electronics. If you break the screen on your iPhone, he can make it as good as new for pennies on the dollar. They repair and repurpose clothes and shoes.

They sell stuff they no longer use.

My kids regularly sell things on eBay and Craigslist. They realize that if they want to buy something new, they need the funds. They also understand that although they are tired of a personal belonging and no longer use it, that does not mean that it does not have value to someone else.

They delay gratification.

They really have cut down on impulse purposes. Every dollar spent is a dollar that can’t go elsewhere. They are unlikely to buy some bauble the first time they see it. They often go home and think deeply about whether they really want/need it. Most of the time they eventually decide against the purchase.

They think more about ways to earn extra money.

My son now mows the lawn of our next door neighbor. My daughter asks about extra chores around the house. Both scheme about lemonade stands and other money-making ventures.

Certainly, it’s not perfect. We still catch the kids with candy wrappers from time to time. I, for the life of me, can’t get either of them to keep track of their purchases and savings on a spreadsheet.

But we are making headway. I truly believe my kids now know the value of money and the consequences of spending.

How about you? How do you teach your children about budgeting?

“DocG” is a physician who blogs at DiverseFI.

Image credit: Shutterstock.com

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