As a financial planner and a parent who didn’t grow up with the benefit of family financial literacy, I’m always looking for creative ways to teach my kids about money.
I’m determined to give them a faster start and a better financial foundation than I had. So, my wife and I started young and have been layering lessons and savings along the way.
First, my wife and I found these fun, divided piggy banks, with the option to put money away for spending, saving, gifting, and investing. The kids have been building up cash from lost teeth, birthday money, and recycling deposits. Each of our three kids has a 529 plan for college and life insurance, in case they are someday unable to buy their own. They each have some stock that we’ve put aside as an “independence fund”, a little something to help them buy their first homes or just to get on more solid financial footing after college. So, we’re not supporting them indefinitely. We plan to match them dollar-for-dollar when they earn money in high school and college. Ideally, they’ll put away half of their summer earnings, and we will match their investment in a Roth IRA. We plan on moving any excess 529 plan dollars to their Roth IRAs in the future, especially if they are fortunate enough to earn college scholarships.
Sometimes, the most important lessons are the simplest.
One such lesson came a few years ago when we traveled to Orlando, instead of buying toys or clothing for Christmas. We decided that each kid would get a set amount of money on a Visa gift card that they could use to buy whatever souvenirs they chose while at Universal Studios and Disney’s Magic Kingdom. The idea was that we’d spend less money overall, because we wouldn’t be on the hook for purchases at every gift shop we passed, and the kids, essentially, would be on a fixed budget. Theoretically, there’d be less pouting, because each kid could buy anything they wanted, as long as they could afford it. I was amazed at the result and how each kid handled it differently.
Our oldest son, 10 years old at the time, was laser-focused. He knew exactly what he wanted, bought only those three big items, and was content. Our 6-year-old son tried to buy a little something everywhere. He’d shop around at each gift shop, checking prices on absolutely everything. His goal was to get as many items as he could. Our 4-year-old daughter, the youngest of the three, had her heart set on getting a princess costume at Disney World. But then, she saw a stuffed unicorn at the Wizarding World of Harry Potter and couldn’t resist. In fact, she saw something she couldn’t resist at every single stop and was out of money before ever making it to Disney World. She needed that immediate gratification and was tragically disappointed to hear “no” to everything she saw after her funds ran out.
It was fascinating to observe our kids each developing spending habits that matched their unique personalities. I love to have these conversations with clients, about themselves and their families. Whether you’re a saver who focuses on big-ticket items and works towards them, a bargain shopper who likes to accumulate lots of stuff, or an impulsive shopper who wants every cute and sparkly thing you see, there are things you can do to live within your means and achieve financial security. You, and your financial planner, need to understand your spending tendencies to help make good decisions and manage your own budget in ways that bring you joy, now and in the future. At Foster Group, truly caring for our clients means taking the time to learn what’s in their hearts and helping them pursue their goals.
