Today’s guest post comes from Colleen Higgs. She’s found when we fall short of our own expectations, it’s often our expectations that need to change. We’re using the wrong measuring stick for success. Colleen invites parents to join her in Living Well, Right Where We Are - even when life doesn’t go as planned. Colleen was kind enough to write this article on financially preparing our kids for adulthood. Enjoy!

When it comes to money management, how are you running your home?

“I want my ceiling to be my childrens’ floor.” Carlos Whitaker spoke these words in reference to racial justice issues. Doesn’t that sum up the hope of every parent? In education, emotional and relational health, racial justice, wealth, spiritual growth, we hope our children can rise higher than we’ve been able to reach. 

For past generations, parents could reasonably expect their children to be more prosperous than them, but that is no longer the case.

How do we respond to these economic realities as parents? It can be tempting to retain control of our child’s economic situation, footing the bills and making the decisions on their behalf. But that comes at a cost. 

When we run our home like an all-inclusive resort -  where food is magically replenished and broken toys and lost cell phones are replaced - kids cannot learn to value money. 

Resorts are a lovely reprieve from the real world but they are not preparation for the real world. 

In our eagerness to provide every opportunity for our children, we risk failing to prepare them. Let’s not forget our goal as parents is to raise responsible adults, not large children. 

Less control, more practice

Dr. Diane Dreher says many college students today have been “raised by well-meaning ‘helicopter parents’ who constantly control and protect their children. [These] young people have been denied opportunities to exercise initiative and do things for themselves. It is no wonder that many of them experience overwhelming stress when they face the challenges of college life (Egan et al, 2017).”

Money management, like all skills, takes practice. Our kids need to practice earning, saving, and spending their own money. They need freedom to make mistakes. Better to waste $20 on junk food at age 13 than thoughtlessly run up $20,000 of credit card debt ten years later. 

When we foot all the bills and provide for our child’s every whim, we are not protecting them; rather, we are denying our children the opportunity to practice being a grown up.

Four Ways to Help Kids Manage Money

1. Get clear on your values

Just because you can buy something for your child doesn’t mean you should buy it. 

Malcolm Gladwell’s David and Goliath suggests this language for wealthy parents: “Yes, I can buy that for you but I choose not to. It’s not consistent with our values.” 

Nonetheless, this statement requires a conversation. It demands that you can identify and articulate your values. 

How do your values guide your spending decisions? Do you value travel and are frugal in other areas? Encourage your kids to save up for the trip, too. Involve them in the planning and budgeting.  

Do you value simplicity and so refuse to buy your teen yet another pair of jeans? Let her buy her own jeans. She may opt for a pair at the thrift store. 

Are you paying down debt as quickly as possible and limiting discretionary spending as a result? Explain compound interest to older kids. Tell them that saving money for a long time increases its value. 

2. Shop more slowly

Children benefit from seeing prices in a store and from comparing prices between similar items. Much shopping has moved online during CoVID, but kids can still be involved. Show your child some comparable products before you buy. Compare quantities, quality, and unit prices. 

When lockdown began for CoVID, we filled a whiteboard with household chores. Each task had an associated point value. Points translate to a cash value. The kids have been doing chores and earning points. Their motivation when they want to buy a particular book or art supply is impressive. 

It has been a good way to give kids independence. When our 13-year-old wants yet another smoothie with her friends, she can choose whether to spend her own money. 

3. Use cash

We feel the cost of a purchase acutely when we hand over cash. A 2001 MIT study showed that people were willing to pay up to 100% more with a credit card than with cash.

Unless they set up a lemonade stand, my kids almost never handle cash. Pay any allowance to your child in cash. Handling cash offers tactile learning that PayPal simply cannot replace.

4. Check your motivation before you buy

Donald Miller says we buy to solve an internal problem. The external problem may be that my child seems bored so I figure he needs a new toy. The internal problem is that I want some “me” time. I want him to love this new toy so I can sip my tea in peace. 

Marketers play on our insecurities. We buy something new under the premise that it will give us a fresh start at a deeper level. We buy nicer clothes to feel sophisticated or thinner. We may buy for our moody teen to lift her spirits. 

The next time you feel an urgency to make a purchase, step back and ask yourself why. When we recognize and name what we’re feeling, it loses some of its power. 

We want the best for our kids. Remember that absorbing all the costs on their behalf is not what’s best for them. We need to help them practice managing money. We do that by letting them foot the bill sometimes, make their own spending decisions, and take ownership for their financial health. 

For fresh ideas on what successful parenting looks like, download Colleen’s free ebook at ColleenHiggs.com.