Getting Your Hand Stuck In the Cookie Jar and Other Financial Lessons
Fiscal responsibility is something that needs to be taught at an early age. Parents should intentionally educate their children to be money-aware. It will not be a lesson in their school and is definitely not an example set by our government. Parents need to demonstrate that money does not grow on trees by talking about earning money through allowances and eventually jobs. I started working in our family business as soon as I could walk. I would get ten cents for restocking the candy display. Eventually, I worked up to organizing and ordering the merchandise. However, the big honor was creating fantastic Easter baskets considering the cost of what was inside for reasonable pricing. Business families, unfortunately, get into the rut of children thinking that life is like a cookie jar they can reach into any time they need money. It starts with a cookie but evolves into high expectations of having everything paid for them.
Do your kids expect a car for their sixteenth birthday?
When I was sixteen, I did not get a car for my birthday. Our children did not get one either. However, this seems to be the norm today. We did give our boys a used car they could share. This decision taught them how to work together but also to prioritize the use of the vehicle. Did they need the car to go to work or soccer practice? That would take priority over going to a friend's house to hang out or other non-essential activities. If your child wants a car, the lesson of obtaining a loan, paying for insurance, or at the very least paying for gas is a learning opportunity. For many families, this is a missed chance to teach the value of money, but it should start earlier than the teenage years.
My mom taught me math in first grade by giving change in a cash register drawer. I used that example with our children with an old-fashioned register. When our son was three years old, he could count the coins he put into plastic baggies, each equal to a dollar. We would then go to the educational store to allow him to buy his choice of items. Note, I said an educational store, not a toy store. We encourage our boys to play games to help with their development instead of the popular Ninja turtle figures.
As they grew, we expanded their money expertise with games like Monopoly and Cash Flow. They learned the consequences of their decisions based on choices made. Cash Flow had a budget component that I thought was valuable but ended up backfiring on me as a parent. I did not want them to have an X-box to play video games mindlessly. The boys had a different idea. Working together, they put a budget together on how they were planning to purchase the game if I gave my permission. Their ingenuity needed to be rewarded, and I accepted their plan for a purchase.
Then there is the cookie jar kid mentality. "Mom, can I have a cookie," they would ask. It sounds like a simple request until it expands to "I need that new expensive dress for prom" or "Can you fly me to New York to see my boyfriend?” And eventually, as an adult, "Mom, Dad, I cannot find a job. Will you pay for my living expenses?"
It is hard for me to comment on this since our boys have been fiscally responsible. However, I will say they experienced friends from a very wealthy neighborhood who fell into this category. Our middle son once said, “If you give your kid everything, they expect everything from everyone.” This profound statement initiated our withdrawal of our boys from the exclusive private school they attended. Even though we valued the highest education possible for our children, the influence of their peers was not worth the risk.
Having a family development plan is key to the next generation’s success. 70% of wealth transfers will fail in the next generation. If that does not give you a reason to look into succession planning, what will? Stop the cookie jar mentality and educate the next generation about money and responsibility.
What are you doing with your family to educate them on finances?
