Cards and consequences.

th-1(I’ve decided to re-publish articles now and again in honor of what the kids call Throwback Thursday. Enjoy.)

On Tuesday I participated in a TweetChat sponsored by Ally Bank, on the topic of “teaching kids the value of money.” One of the responses from another participant frankly startled me.

The question: “When is the right time to talk to your children about credit card debt?”

The answer: “I’d say when they have their own card (and a real sense of consequences), most likely as a freshman in college.”

After picking my jaw up off the kitchen table, I sent out this response: “Waiting till they have their own card is like waiting til daughter gets pregnant to say, “Don’t misuse that thing, y’hear?”


The original poster amended her answer: “Should’ve clarified: Put ’em on the family card as kids, so when they’re frosh they understand the consequences.”

That made me feel somewhat better. If during those years parents talk regularly about money – and also walk their talk, i.e., never carry debt themselves – then the youths might have an inkling of what those consequences are.

Or maybe not, since some people go off the rails no matter how responsible their parents are. We live in a consumeristic society and kids are so specifically targeted by marketing forces that it’s no wonder they want to buy, buy, buy.

And way too many parents aren’t particularly money-savvy. Another chat participant suggested that “16 is a good age to start talking to them about it as they are approaching age to get credit.”

Start talking about it at 16? Debt – specifically, how to avoid it – is the kind of thing we need to talk to our kids about from the time they’re old enough to start matching “money” with “things I want.”


Connecting the dots

Some kids don’t even see money all that often – real money, that is. Their parents’ paychecks are direct-deposited and their bills paid online. Mom and Dad use debit or credit cards for everything from a quart of milk to a family vacation.

If they’ve maxed out those credit cards, they don’t talk about it. If they have enough money to invest, they don’t talk about it. Money is one of the last great taboos.

Too often “all our kids ever see us do with money is spend it – they don’t see us save, they don’t see us give to charity, they don’t see us pay bills,” says Neale Godfrey, author of a number of personal finance books.

She and other PF experts with whom I have spoken offered tips for getting your kids to connect the dots between “money” and “responsibility.” Some examples:

At the supermarket: Have them circle items in the food ads. Let them match coupons to products. Explain that you’re buying store-brand oatmeal because it tastes the same and costs less.

At the cash machine: The money we earn at work goes to the bank and we can use it for things we need. But we can’t take out more than we earn.

While shopping: Use price comparison websites to find the best deals. Hit cash-back shopping sites like Mr. Rebates or Dollar Dig. See if you can meet some of your needs through thrift stores and yard sales. Explain why you’re doing these things, e.g., “This sled cost us only $5 at the garage sale – it would have been five or six times as much at the hardware store.”

In the toy aisle: “Your allowance isn’t enough to pay for that toy. If you really want it, you can get it by saving for a few weeks.” Delayed gratification is a great skill to learn young. (Some adults I know still haven’t mastered it.)

At the library: Books specifically for young people are out there. A few I’d suggest: “Not Your Parents’ Money Book,” by Jean Chatzky; “How to Be Richer, Smarter and Better-Looking Than Your Parents” by Zac Bissonnette; and “More Money, Please: The Financial Lessons You Never Learned in School” by Scott Gamm. If your library doesn’t have these books, ask if they can be ordered or at least borrowed from another branch.

Online: Plenty of free online games and apps will help you teach your children about money, starting with the “Sesame Street” set (“For Me, For You, For Later: First Steps to Spending, Sharing and Saving”).


Walking your talk

And when your kids come home talking about a classmate’s electronics-saturated home or the theme park vacations everyone else seems to take each spring?

Model your own values by talking goals, such as “We are choosing to put money away for your education and our retirement” or “We choose to have one parent at home so we have to be very smart with our money.”

Always frame your spending as “choice,” says personal finance writer Liz Weston, who was also at the TweetChat. Rather than saying “We can’t afford that on what we earn,” say “We’re choosing to spend differently.” Because you are: You’re choosing to spend less than you earn rather than go into debt for things you can live without.

You might also remind them of the places your money goes. I once read about a couple who, weary of their kids’ constant begging for Stuff, brought their paychecks home in cash and piled the bills on the table. The kids’ eyes bugged out: Wow, we’re rich! Then Mom and Dad started carving off chunks of cash: this much for the mortgage, for utilities, for groceries, for the orthodontist…

When most of the money had been taken away the parents said, “This is how much we have left to live on each month.”

The kids got it. They might not have been happy with it, but at least they understood the connection between available dollars and everyday obligations. “Live below your means” is a huge, huge lesson. (Again, many adults haven’t figured this one out.)

During the chat Liz reminded us that every kid is different. Money education techniques that worked like a charm with your first kid might not register with your second.

Try anyway. Please. Send your kid out into the world with zero experience of money is setting him up to fail.

Readers: How do/did you approach finances with your kids?

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  1. Holly Samlan

    I gave each of my DDs an authorized user credit card we did NOT use as soon as they started to drive (16). ALL my c0-workers though I was NUTS. However, boith, unlike a bunch of their friends, graduated from college w/NO credit card debt.

    My kids also grocery shopped w/me until they were in school FT. they soon learned I seldom bought anything not on sale w/a coupon (meat, cheese & eggs excepted but frequently bought clearance or Aldi).

    Since my kids are now in their 30’s there was NOT direct deposit, debit cards or online banking. They saw me deposit paychecks, get cash on a weekly/monthly basis from the bank.

    They KNEW I had a budget and if we were over in a category (electric in summer) something else HAD to be cutback (eating out, ground beef instead of steak…).

    today they both are debt FREE except for their mortgages. Grad school paid in full for both (loans for DD1 & pay as she went for DD2). Credit cards paid TOTALLY every month.

  2. CathyShouse

    Our son worked a part-time job after he turned 16. Nothing replaces the lessons of responsibility learned by working a “real” job. They need to associate work with money as early as possible. A small, local credit union here lets young people with a parent co-signer open a checking account and have a debit card. He deposited his paychecks in his own account and paid for things with a debit card. He also took a personal finance course at school his senior year of high school.
    We took both of our kids to the bank when they were very young and opened savings accounts for them. They put gift money in there and liked to watch their balances grow, or make withdrawals to buy things. For a time, our daughter absolutely loved that game called Cash Flow, I think, from the Rich Dad Poor Dad guy. Monopoly isn’t too bad for teaching some money lessons either!

    • Holly Samlan

      My kids also HAD to have jobs as soon as legally able since we INSISTED they had to pay for their routine auto expenses (gas) & the uptick above us on the insurance for covering them.

  3. Rose1953

    We were successful with three of our five kids; 2 of them are drowning in debt but yet ask to “borrow” $10 for Starbucks, 3 of them are managing mortgage/rent payments and are driving affordabe cars. Where did we go wrong? I don’t know – it must be in the genes.

    • Hey – you can do everything “right” and your kids will still make crappy choices. They are human, after all. Don’t lend them the $10 for Starbucks, LOL. DS is still spending a lot of money on his hobby, anime videos and video games. But it’s his own money. He is 25 and hasn’t asked us for money since before he got his paper route at age 11. DD, God bless her, is like her grandmother — as tight as the paper on the walls. Good luck to everyone as we try to teach our kids sensible money habits.

  4. TosaJen

    I agree that it’s about framing money decisions as choices. My parents were middle-class comfortable and frugal (thank goodness, now that they’re retired). But they were grimly frugal: my dad controlled the money and didn’t talk about it or share decision-making, so there was a lot of tension around money at our house. After a brief period of buying myself nice things, I got on the austerity bandwagon, but my brother spends money almost compulsively.

    Our experimental results are limited, since the kids are only 9 and 11. We started them with a modest allowance early (4?) so that they could make choices with “their” money and understand that money is a limited resource. Losing and wasting their money has natural consequences. I don’t regulate their spending, except on junk food.

    I think we get less whining about buying them stuff than we could. As the kids get older, we’re getting some dissatisfaction about not giving them everything their friends have (eg Disney is HUGE in the midwest), but that kind of thing will always be true, no matter how much we spent on them.

    DH and I are trying to model a positive and grateful attitude about maintaining savings, staying out of debt, and buying things that are consistent with our values as a family. We explain our choices, as appropriate for their ages, and let them help make decisions when that makes sense. Yeah, it’s easier and faster to say “we can’t afford that,” but that isn’t strictly true, and doesn’t teach them anything. Sometimes they get it, and sometimes I have to remind them that our jobs as parents are to keep them alive and healthy and teach them to live without us. Everything else is at our discretion, and they don’t have to like it. 🙂

  5. lostAnnfound

    My two are now 19 & 17; the older one has a good grasp of saving/spending, the younger is starting to see the light. The first sign that it was time to show them how we use our money was when they were much younger, maybe 6 & 8. We were out somewhere and they asked if we could go out for dinner. I said not that night because we didn’t have the money to do it, but we would go out on the weekend. Then one of them said “Well, you can get some more money at the ATM”. They thought you put your card in the machine and money came out of it any time you wanted it. It was a good point to start showing them that money is not limitless and spits out of a machine whenever you want it!

    • Donna Freedman

      I once watched a kid melt down in the mall when her mom wouldn’t buy her something she wanted. The mom said, “I can’t afford that.” The kid wailed, “You have your card! You could GET some money! You just don’t want me to have it!”

  6. Katherine


    When raising three teenaged girls, we had a lot of issues to overcome (they were my step daughters living full time with hubby and myself).However, with our finances, it impacted everyone and we attempted to work together. We had three cars, three college educations and one wedding so far to finance.

    For occasions like proms, the girls were given a budget. However they chose to spend the $$ was totally up to them, but there was no more financial contributions from DH and myself. If they spent it all on a dress (approved by us), everything else came from them. It’s amazing how creative they got. Youngest child bought dress at consignment shop, asked for discount and after hair, nails, transportation, etc — baby girl had money left over!

    We have one child who is a “flight risk”. So for college, she had to pay up front for her classes and was reimbursed by grades. She worked for a year before she started to school. Grades were reimbursed by A=100%, B=85% and C=70%. This way, she knew how hard it was to pay for classes and she would be out $$ if she didn’t apply herself. Either way, she had the opportunity to get a college education without debt.

    Today’s world wants to give, give and give to our children without them earning or working for it and it is truly unfair to the kids. If they get everything that they want when they want it, they don’t earn it and don’t truly appreciate it. I can assure you, when they apply their hard earned funds to what they buy, they appreciate it more than DH and I handing it over.

    Financial learning and responsibility for kids should start early. Allowances should be earned by age appropriate chores. My DH constantly states that we don’t live in the house alone and the girls have to help us maintain it and take care of the house and the pets. They see us pay bills. They hear us discuss financial plans and our long term financial goals. They hear our budget discussions. They hear us talk about strategies for updates and repairs to the house. They help us make some of those upgrades and repairs.

    Most importantly, they’ve heard us say “we can’t afford that right now, so we’ll have to save for it and make a plan”. They’ve seen us save our $5 bills for special occasions or trips. They now ask me for coupons for items or at certain stores. They have helped us price compare items for their cars or for their rooms.

    Yes, my daughter has a credit card that is ours but she uses ONLY for school and authorized charges. I monitor the expenditures and if any expense is outside of school, it must be approved, such as a new set of brakes for car or to get a prescription filled. It has established her credit and helps us keep up with school expenses for taxes as well. The card is paid off every month. Because of her having access to this card, she sees what is on the card and knows just how expensive books are (she rents most of them). She sees how much tuition is and knows that when she graduates next year, she doesn’t owe a dime for her college eduction. Nor do her father and I.

    Don’t be afraid to teach your children about money. Help them learn from your mistakes so they are not repeated. Help them to appreciate what they have and plan for what they want. As parents, our job is to help them not need us. Show them how to manage their money and be financially and fiscally responsible. “If you don’t manage your money, your money will mange you.” That’s what we have tried to teach our children.

    Stay frugal my friends.

    • Katherine,
      LOVE your idea about reimbursing your child for college classes based on grades. We have one going to college in a year, and we may apply this strategy after I discuss with DH!

      I love reading these boards to get ideas from other frugal individuals. We give our teenage son his “clothing” budget to spend as he pleases. It amazes me how his choices changed when it is his money…suddenly plain white tshirts were fine for football practice instead of the expensive Adidas shirts!

      I also like the idea above of laying all the income on the table in CASH, and then start taking away for household bills. What a great visual aid…may be a great idea for my 13 year old.

      • Donna Freedman

        I’ve heard the same thing before: Give your kid $X and say “This is it until January — if you spend $150 of it on expensive shoes and $150 on expensive jeans, then the rest will have to cover anything else. No bailouts. Zero. Seriously.” Suddenly they’re shopping retro-chic at Value Village and looking at price tags on the clearance rack.
        The cash thing certainly puts it into real-world perspective: Here’s what’s left after taxes…and here’s what’s left after basic expenses. Whenever someone breaks his glasses or gets bronchitis, there’s even less left.
        Thanks for reading, and for leaving a comment.

    • Donna Freedman

      As they used to say on “Hee Haw” — sa-LUTE! Good work.
      Thanks for sharing your ideas.

  7. Shellye Carpenter

    I’ve worked in financial marketing my entire adult life, so my three kids have had money concepts drilled into their skulls from a young age. When my two oldest were of driving age, they had to get a job in order to pay for gas for their car. They both work great summer jobs with their father’s company than enable them to work minimal hours during the school year, although they still do.

    When my oldest child went to college, I got her a credit card at the institution I was working at, telling the loan officer to give her a TINY limit. He laughed but did it, and my kid has not gone over the limit, made payments on time, and apparently only uses the card for books and misc. school expenses. She has several bank accounts that she manages herself and has a pretty good grasp on things, relative to her age. I told her to please, please, PLEASE stay away from student loans, and she’s been able to do that with one year of her undergraduate studies left. She also wants to go to grad school, and that’s where I’m a little concerned, but I’ve beat it into her that student loans are a pain in the neck that seems to never go away. If I can get my kids through college with no or minimal student loan debt, I will be a happy camper.

  8. It’s way past time for me to get some good lessons going on this topic. I very much like the idea of cash. I pay my rent in cash but never thought of letting my kids see it. I have also considered the Money account from Capital One 360: https://home.capitalone360.com/teen-checking-account

  9. Cathy in NJ

    My daughter can’t remember an age when I didn’t discuss frugally and money choices with her. Today she is careful with her money.
    DD wants to do a project in her room to put picture frames on narrow shelves that she saw online. The first thing she asked is to go yard sailing for the frames. The frames are going to be painted from paint we already have at home. Then DD went online to comparison shop for the narrow shelves. I like the planning for costs and using frugal sources.

    • Donna Freedman

      Good for her! You’ve given her the gift of smart shopping, which means she’ll have less money stress than some of her fellows. Go ahead — pat yourself on the back.


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