2019-2020 was an exercise in teaching our elementary school-aged children personal finance, driving independence and encouraging them to make constrained resource decisions. This is the first of several posts outlining the plan and chronicling our journey. I hope it helps your family thrive too.
I started writing my new book in January 2019. Working title: Second Grade CFO. This month marks the 1 year point since starting our grand experiment, teaching personal finance to our elementary school-aged kids. The results have been stunning. I'm starting a series of posts to share our journey and learnings. I hope you can implement many of them in your household.
Start with Why: Why teach personal finance this young? Because we want our 3 chickadees to be well-equipped to make their own way in the world financially. Start them young, so they can make mistakes with nickels and dimes. This will likely reduce the mistakes they later could make with Jacksons, Grants, Benjamins, and McKinleys.
Our ultimate goal - their developed ability to stand on their own two feet when it comes to money. We don't want them living in our basement (or worse) for the rest of their lives.
More than just a book, I documented a grand experiment conducted on our real, live, elementary school-aged guinea pigs.
What would happen when we took away all their cash?
What would they do when we let them buy [almost] anything they had the funds for?
Who would go broke first, and how would they react?
These were just a few of the initial questions that we formed hypotheses around. Knowing their ages and personalities, many of our predictions came true. The kids were imperfect on doing their weekly household chores (dog poop duty, anyone? anyone? hello?).
Baby Girl saved the most diligently once she set her heart on a goal. Little Man was the first to go broke, nickel and diming himself out of funds. Wee One bought school lunches like they were going out of style, and being the youngest - cared the least.
Other outcomes surprised us. We underestimated the speed at which they would adopt their new power and internalize how money works. We dramatically underestimated how beautifully the household conversations would change. Now they often will say "Please ..." and "I'll use my own money!"
Personally, I constantly have to remind myself to let them buy what they want* even if it's a dumb (my value assessment) choice. Just say yes Brooke, just say yes. Just say yes. Just say yes ... I admittedly default to "No!" when it comes to spending on things that I don't value. To honor the learning process though, Yes has to be the default response. They won't believe me. They have to learn it themselves - it's the only way.
Incrementally more Pokemon cards/figures have diminishing happiness returns.
Many little meaningless purchases add up to a whole lot of nothing.
Big things take a long time to save up for, and require near-term sacrifice.
The overarching lesson to be learned is how to make constrained resource decisions. What matters most? Make judgment calls between buying 3 little x's or 1 big y. This sounds simple but contains a deep set of psychological interworkings. There are personal values decisions to weigh, tradeoffs to contemplate, and delayed gratification choices to test one's patience.
The next several posts outline the parameters of our plan and chronicle what happened throughout the course of a year. I look forward to your feedback and learning what works in your family! Please read, comment, and share liberally!
* Certain purchases like a cell phone are off-limits because the kids are not mature enough to handle them responsibly, nor ready to commit to the monthly service fee.
Stephanie Brooke Lennon is the author of Family Bank Blueprint, GoldQuest, and What Would Water Do? Simple Strategies for Navigating Life's Obstacles. Her titles are available in Paperback and Kindle on Amazon.com. Follow Stephanie Brooke on Facebook, Instagram, TikTok, YouTube, Twitter, Amazon, and at ​BrookeLennon.com.