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How do you teach yoru children (or how were you taught) the value of a dollar?

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TravelingGal

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I''m always thinking ahead and looking for good ideas.
 

steph72276

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Well, our son who is 4 is on "commission". We have a little chart and he gets $1 per chore per week for doing things like feeding the dog, cleaning up his room, taking things to the recycling box, taking his folded clothes to his room, etc. He has 3 jars where he puts his money: Spend, save, and give. He saves up for things he wants long term (like a new movie or toy), spends on little things like $1-$2 car, and gives 10%. Works well for him, but he is a natural saver and it takes a lot to get him to spend anything.
 

mela lu

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oh dear. Here we go.

I seem to have tuned into my ethical chords lately.


My parents made my brother and I get a paper route at the ages of 8 and 10. My dad accompanied us on the route during delivery AND collection.

When we got paid, they made us give them 10% of our earnings, which went into savings.

***

When I got older, and needed to pay for University, get this....I worked at a bar at night and I would HAND OVER ALL MY TIPS to my mom at 4am when I got home. I learned how to live off of my ''minimum wage'' paycheck, while my Mom banked all my tips.

I did this throughout university, and managed to pay for everything. I came out debt free!

***

In both situations, I was docile enough to let my parents guide me through these money saving tactics because I knew I couldn''t do it alone. These would not have worked had I have been a rebellious child.

I always thank them for both of these scenarios, as they ABSOLUTELY taught me strategies for saving, and how to live within my means while working towards a goal.

FWIW. this was before the days of Credit/Debit Cards. I the first step in learning the value of a dollar is NOT TO USE CREDIT for anything!!!!!!!

Cash in hand is the biggest reality check there is.
 

TravelingGal

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Date: 4/6/2009 4:40:27 PM
Author: mela lu
oh dear. Here we go.

I seem to have tuned into my ethical chords lately.


My parents made my brother and I get a paper route at the ages of 8 and 10. My dad accompanied us on the route during delivery AND collection.

When we got paid, they made us give them 10% of our earnings, which went into savings.

***

When I got older, and needed to pay for University, get this....I worked at a bar at night and I would HAND OVER ALL MY TIPS to my mom at 4am when I got home. I learned how to live off of my ''minimum wage'' paycheck, while my Mom banked all my tips.

I did this throughout university, and managed to pay for everything. I came out debt free!

***

In both situations, I was docile enough to let my parents guide me through these money saving tactics because I knew I couldn''t do it alone. These would not have worked had I have been a rebellious child.

I always thank them for both of these scenarios, as they ABSOLUTELY taught me strategies for saving, and how to live within my means while working towards a goal.

FWIW. this was before the days of Credit/Debit Cards. I the first step in learning the value of a dollar is NOT TO USE CREDIT for anything!!!!!!!

Cash in hand is the biggest reality check there is.
Good tips ladies!

Re: credit cards: I wonder if that is realistic - telling them not to use credit. I want to teach my kid how to use credit RESPONSIBLY (i.e., pay it off every month and don''t buy what you don''t have the cash for). It scares me how the CC companies woo college kids. Do you teach your kids about credit too, or were you taught it? My mom and dad were cash people so they never taught me about credit, only saying when I finally got one that it was "bad."
 

mela lu

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same. I came from a CASH lovin'' Italian family.

I dont know how someone could get away from Credit in this day and age; however, I do think that living within your means is an acquired skill. Mastering how to live on a budget, and manage your monthly cash flow is SO important.

I feel like once you master this, you can introduce the concept of Credit because (in theory) you''ll have some notion of self-restraint already. IN THEORY!
 

Haven

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We saw a young father with his two children at the bank a few months ago. Each child (they were young, six and ten, maybe) had his own savings account, and they were there to make deposits. They went through the whole process with dad, and each deposited what looked to be a few dollars and some change. We heard the dad going over the balance receipts with the kids as they left, and one of the kids said "Wow! Look how much I''ve saved!"

I''d like to do something like that with my (future) children.
 

MichelleCarmen

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Whenever my kids fill up their piggy banks for doing chores (sweeping the floor, putting silverwear away), we take the change and go to a coinstar machine and cash it in and take the money and deposit it into their two accounts. Often they're given dollars or even $20 bills from relatives for their birthdays. That money is folded up and put into their piggy banks, just as loose change is, and saved for the next bank visit.

They know nothing about credit. I guess for their age it would be, "I'll buy that pokemon card set for you now if you do such-and-such chore later." Rather, they do the chores, then get the treat.

Last week, I gave them 25 cents for each box they packed, but watching their enthusiasm eat away at my change collection, I reduced it to 10 cents a box. They saved enough to buy and collect, what else, but pokemon cards.

Oh, and I hope I can properly teach them about credit cards. Sometimes I worry because they may see my debit card and equate that with "charging," and later, as they grow older, think that it's normal to use only plastic to pay for things.
 

dreamer_dachsie

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Well I learned the value of a dollar by being raised poor!
So all you have to do is raise your child is assisted housing and live on 15000 per year. Then Amelia will be so motivated to have a better life she will get a PhD and support you in your old age! haha

j/k. Good idea to think about it now, it is so important.
 

lili

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Wow, thinking ahead that early already?
Sometimes I wonder if knowing the value of a dollar is taught or more built-in w/ the personality.
I wonder this because between my siblings (4 knows the value of a dollar and are good w/ money, while two will spend more than s/he has).
We all grew up under the care of our very frugal grandmother who taught us at an early age not to be wasteful -- be it food, money, or energy.
Fortunately the two did grow up and are managing well w/ their money now.
 

lili

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Date: 4/6/2009 6:19:55 PM
Author: dreamer_dachsie
Well I learned the value of a dollar by being raised poor!
So all you have to do is raise your child is assisted housing and live on 15000 per year. Then Amelia will be so motivated to have a better life she will get a PhD and support you in your old age! haha
j/k. Good idea to think about it now, it is so important.
LOL.
 

soocool

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Anytime my daughter wants to make a large dollar purchase, she needs to justify why she wants it even though she will pay for it with the money she earned. I also make her wait a few weeks to think about it and then decide instead of making an "impulse purchase". Then she has to find the best price. 9 times out of 10 at the end of the 2-3weeks she has forgotten about what she wanted to buy or because of her research decided against it. That way she knows for sure that she is spending her money wisely.
 

LtlFirecracker

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My mom started giving me a small allowance when I was 4, 1 dollar a week. If I wanted something like candy, she told me I could use my allowance. With how little I had, I often passed.

At some point, after I started getting Christmas money, my Father took me to open a savings account. I got the book, and I would put all the money as a gift I got in. When I was in 3rd grade, I wanted to spend a week on a farm. It was $200, and my parents didn't have a lot of money, and for some reason, at that age, I knew that. So I offered to pay myself. I did chores and used the money in my savings account. The head of the camp could not believe I paid myself.

When I was a teenager, my mother got established in her second career, and started making good money. Suddenly, she had a new car, and I got nice clothes. I realized that I wanted a better lifestyle, but I didn't need to be super rich.

I got my first credit card at 16. My mother told me she always paid off her credit cards, and had a long discussion with me abut the proper use. She also discussed the concept of interest. My father hated using credit cards, but did have to take some debt to make ends meet, he was always stressed about it, and put a priority to paying it off.

During medical school, I had to take on some debt, but I was careful. The only major thing I bought was a new car. I was sick of having the surprise of breakdowns and didn't want to keep pouring money into a car I hated. So I bought a civic and drove it though medical school and residency without any repairs

Now I am almost 30, I own my condo (that ended up being a mistake but I have made all my payments), I just bought a new car (my post residency car early), and only have one credit card with a very conservative credit limit. I also have a emergency fund saved. I think the best thing my parents taught me was how to save, and how to use a credit card.

I don't know if this will be helpful or not, but with the advice you have given me in the past, I know you will do a good job teaching your children about money.
 

LtlFirecracker

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One thing I have herd that I might try. Some parents teach their child the concept of interest at a young age. I think developmentally, the earliest you can do this is at age 6-7. How it works is that the parents give the kids an allowance, and at the end of the week/month, they give them a little more based on how much they saved. You have to keep the math simple, as kids this age don''t understand the concept of a percentage. So for every dollar they have, you could give them 10 cents, or something like that. It gives them an incentive to save.
 

Haven

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Date: 4/6/2009 5:55:15 PM
Author: MC
[ . . .]
Oh, and I hope I can properly teach them about credit cards. Sometimes I worry because they may see my debit card and equate that with ''charging,'' and later, as they grow older, think that it''s normal to use only plastic to pay for things.
My mom used her debit card all the time when I was growing up, but I always thought that meant it was coming out of her checking account, but I have a totally valid reason for thinking this: her name is Deb, so I thought she was saying "Deb-it" as in "Deb will pay for it." I thought my dad had a "Dave-it" card, and that one day I''d have a "Lori-it" card, which I always thought sounded kind of funny. Ha! Anyway . . .
 

LtlFirecracker

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Date: 4/6/2009 9:05:21 PM
Author: Haven
Date: 4/6/2009 5:55:15 PM

Author: MC

[ . . .]

Oh, and I hope I can properly teach them about credit cards. Sometimes I worry because they may see my debit card and equate that with 'charging,' and later, as they grow older, think that it's normal to use only plastic to pay for things.

My mom used her debit card all the time when I was growing up, but I always thought that meant it was coming out of her checking account, but I have a totally valid reason for thinking this: her name is Deb, so I thought she was saying 'Deb-it' as in 'Deb will pay for it.' I thought my dad had a 'Dave-it' card, and that one day I'd have a 'Lori-it' card, which I always thought sounded kind of funny. Ha! Anyway . . .
That is funny

I remember my first experience with the ATM, I thought it was the coolest thing. One day I was arguing that I wanted something (I must have been pre-school/kindergarden age), and my parents told me they didn't have enough money. I said "Get it from the machine." They looked at each other, very confused, than realized that I thought the ATM just gave out free money, and started laughing. They than tried to explain to me that that is not how it worked. Not sure exactly what they said.
 

luckystar112

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Date: 4/6/2009 9:05:21 PM
Author: Haven

Date: 4/6/2009 5:55:15 PM
Author: MC
[ . . .]
Oh, and I hope I can properly teach them about credit cards. Sometimes I worry because they may see my debit card and equate that with ''charging,'' and later, as they grow older, think that it''s normal to use only plastic to pay for things.
My mom used her debit card all the time when I was growing up, but I always thought that meant it was coming out of her checking account, but I have a totally valid reason for thinking this: her name is Deb, so I thought she was saying ''Deb-it'' as in ''Deb will pay for it.'' I thought my dad had a ''Dave-it'' card, and that one day I''d have a ''Lori-it'' card, which I always thought sounded kind of funny. Ha! Anyway . . .
Haha! That is freaking hilarious!
 

mrssalvo

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tgal- My girls are 7 and 5. my oldest is a saver. she will not spend any money she gets and puts everything in the bank. my 5 year old cannot keep a penny. she loves to spend money and I have to make her save. I think some habits you''re born with. I actually have to work with my oldest that it''s okay to spend a little. I don''t want her to hoard everything because that can be just as bad as poor spending habits. I set up commissions for my kids. Some chores they are required to do as part of the household. they can then earn more by doing extras. They must save 10%, give 10% and can do whatever they want with the rest.

sidenote: my hubby gave each girl a quarter last week to buy a gumball. my oldest of course didn''t want to spend it and kept her quarter. My youngest decided to wait for another store with a better gumball selection than the one at the restaurant we were at. We get in our car and my 5 year old says, "My sister in a saver, she saves her money. Me, I''m a buyer, I like to buy things..plus, if you give the cashier money they will give you money back too." pretty good self identification for 5
 

pennquaker09

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Believe it or not, my dear mother, has worked in banking and finance for her entire career and we have not once ever had a conversation on saving or the value of a dollar.

I have to say that I am pretty much 100% against the idea of kinds younger than say 10 having chores. Maybe something simple like picking up toys and making up their beds, but dishes, laundry and what not are my responsibility. Right now, we have some help, but I don't think it's always going to be that way. I know I don't want them to think that they are always going to have somewhere there picking up after them.

I think the concept of saving and everything is something that she be taught once they are teens. Once they get older, I think it is easier for them to understand that the iPod is $250 and it's not just something you're going to get just because. Let's say Kate and Gray are 15 and they are decent kids; they clean their rooms and bring home good grades. I would buy them iPods. If they're total slobs, they would have to sufficiently please me in order to earn the money to get said iPods or whatever.

I think I like the notion of explaining to them the difference between a want and a need and that I will provide them with all of their needs, but if it's something that they just want, they are going to have to earn that. I'm not going to make them go and get jobs, because I am 100% that also, but they'd just have to do simple things that let me know they are responsible.
 

elrohwen

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Hmmm, well, I did get an allowance, but it was maybe $5-$15 a week throughout my lifetime. Even as a teenager I don't remember getting more than $15, but my parents did pay for clothes (within reason), so I could get by on less money.

If I really wanted something I had to save up. To do this, my mom would often assign me chores and pay me $1 per chore or something. Once she let me clean all of the windows in the house (inside and out) for $100 because that's how much the company charges (just to do the outside). That was awesome for me, and she actually got more for her $100 than if she had hired the usual company to do it.

For more expensive things they were pretty generous and would often pay for half if I came up with the other half. I don't think I was necessarily spoiled, but they made it possible for me to get most of the things I wanted if I showed I would work for them.

When I was ready to go off to college, I had to earn $1500 each summer so that I had $750 each semester of spending money. I could spend any extra I earned, but I had to save at least that much (it seems like so little now, but when you only earn $150 a week it takes a while!).

ETA: As far as credit cards go ... I was always brought up thinking that you *had* to pay off your credit card every month, so I didn't know any other way. When I went to college, I got a debit card with my own money, and I also got a credit card linked into my parents' account. This way I could spend in an emergency, but they could check on every dollar. It worked pretty well! A kid isn't going to abuse a card as much when their parents are footing the bill and can take it away at any time.

ETA2: My parents are so debt averse that they would not let me take on student loans. I wanted to go to a fancy private school, but unless the money could be scraped up (my relatives ended up chipping in) I would have to go to the public school that they could afford. My mom also wasn't crazy about me working through school because she wanted me to be focused on doing well, not stressed about money. I did end up going to the private school and am so so glad that they didn't let me go into debt (however, on a side note, the public school choice was Virginia Tech and I would've been there through the shootings ... everything worked out for the best on more than one level).
 

Aloros

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We give my stepson-to-be a weekly allowance. He has the option of earning more money through extra chores. He can also lose money by wasting food, leaving lights on, and leaving messes (essentially he''s paying us to pick it up). We usually charge a quarter.

I like taking him to the grocery store with me and showing him how to find the lowest price. It also shows him how little things add up to a pretty large sum by the time you check out. He''s always amazed by how much we spend on groceries (and we buy cheap!).

We help him set monetary goals for things he wants that are more costly. He has a jar, his piggy bank, where he can save money. He also has a wallet for his spending money. We guide, but try not to push too much. I think one of the ways you learn to save money is by not having it when you want to buy something!

When he loses something he shouldn''t, like his tupperware for lunch, he has to replace it out of his allowance. He gets to pick what he wants to buy to replace it, so it behooves him to shop wisely.

He''s 11, and I''ve spoken to him a little bit about credit cards, but I don''t know how much he "gets" it.

Also, when he says "Let''s buy this," or "Can we get this?" I like replying with, "Well, if you save your money, maybe YOU can get it."

It''s a learning process, that''s for sure!
 

Italiahaircolor

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When I was younger (like 10 or so) all I wanted a cocker puppy...seriously, it was my life''s goal. My Mom,who is a dog lover, was totally on board but wanted me to earn the puppy rather than have it bought for me. Of course at 10, my money making abilities were signifcantly stunted, and in reality it would have taken forever to save for a puppy --- so my mother offered to match me 5 to 1. For every dollar I earned, she gave me 5 towards my cause.

I used to make my bed, put the recycling out, whatever I could do to earn money...and when I did, I would shove it into this big, ugly orange persian cat bank. After about a year of savings, I finally had earned my puppy Tessa. Now, I don''t know if I was really even close to having the price of the puppy saved up...or if my Mom found the right puppy at the right time and just let the rest be wash...but I felt such satisfaction...and I was so pleased with myself. I cared for the dog until she passed...and I always, always remember exactly how I came to get her.
 

elrohwen

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Italia, what a lovely story! I think it''s so important to make kids work for what they want, but also help them out when you know they''ll never earn that much on their own.
 

Mara

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i wasn't. which is why i had a lot of debt racked up in college and it took me years to pay it off. i didn't even get my first bank account until the summer before i went to college. i always just cashed my checks from 'working' and would spend the money. it took me years to figure out how to budget, how to save, how to spend. we would be farther along IMO if i had known all of that sooner.

i have said this before but i think that kids should have to take a personal finance class in high school to figure out how to prepare themselves for the future. you think it's common sense but it's not always. and i think because a lot of people just think it's common sense, that not all parents think about teaching it correctly. my parents were great in my opinion, but that one thing is something that i never really learned from them. i also never got an allowance at all which i think was a factor, they just bought whatever i wanted/needed. but yes, buy it only if you can afford it from a young age. credit should be introduced much later. def will be doing this with any kids we have!
 

curlygirl

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Very interesting question, TGal! I like hearing the responses.

I think the way I learned was that my parents didn''t give me everything I wanted. We lived in a really nice upscale part of NJ (yes, this does exist!) because my parents wanted us to be in a good school system but we weren''t on the same financial level as most of the other residents. Our house was smaller and older, we didn''t have fancy cars, we shopped at outlets and bought things on sale--weren''t poor but we sure as hell weren''t as rich as everyone else. So watching my parents scrape together their money to help us somewhat "keep up with the Joneses" really resonated with me. When I saw my mother take on a night job at Bloomingdales to get us through the holidays, I think it really clicked in my head. I never had an allowance but always had a bank account. I did chores around the house but didn''t get paid for them. I never felt like I was lacking anything necessary but I did see that others had more and as a child, of course I also wanted more but learned that I couldn''t always get everything I wanted. I started working as soon as I turned 16 and haven''t stopped, even worked all through college. And now that my parents are older and their situation has changed, I see them enjoying their money by traveling around the world and doing all the things they always wanted to do.

As an adult, I''ve always been a saver but I splurge every now and then. People might call me frugal but I think I''m just being smart. I have a very pragmatic personality, I guess. I''m amazed by some people who buy expensive things for themselves and justify it by saying "I deserve it!" I don''t know, I''m just not like that. I don''t think I''m deprived of anything but I just don''t believe in excessive, unnecessary spending. I hope to pass this along to my children somehow without appearing to be a miser but I''m not sure how!
 

phoenixgirl

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Well, I think I was given more than a lot of kids, but I also think my parents made me careful with money . . .

My parents put inheritances to me from their parents and their own money in an account for me, which I was "responsible" for managing from a young age. My dad kept tabs on it (much later than he should have too . . . even after I had it changed from a UGMA account his adviser still sent him my statements) but ultimately I was in charge. He would tell me options but I always had to make the final decision.

Other than that, my dad gave me an allowance of my age each week until I turned 18. But I had to ask for it on Saturday. If I forgot, then I didn't get it. I had to use this money for all treats for myself and presents for my family and gas money, so I couldn't just go blow $15 a week.

I didn't have a job--no one did really at my high school which was crazily competitive. Our top five went to Harvard (2), Princeton (2), and Yale, and you didn't get into those schools if you were working an after school job instead of candy-striping and being captain of your sports team and editor of the yearbook. But I had to pay for my car insurance, which was expensive in NJ, out of my nest egg or with summer earnings.

You'd think that not making kids have jobs and giving them nest eggs would make them irresponsible with money, but my siblings and I all turned out to be very frugal (well, very for them -- somewhat for me . . . I was born later in my parents' lives when there was more money and therefore I have more expensive tastes). Somehow putting us in charge of the money made us scared to see it disappear. It wasn't as though we were suddenly given this money at 18 or 21; we had always known about it and known it was important to grow it.

I read that Warren Buffett gives his children/grandchildren the tax-free limit each year, which isn't that much when you're as rich as he is, $12000 a year now. His theory is that it gives them the power to do anything they want with their lives (you can still be a teacher or a fireman and make $35,000 when you know it will really be $47,000) without giving them the ability to do nothing. I think that's how the nest egg worked for me. It was there so I didn't get into debt and could make a down payment on a house, but it never enabled me to be a lazy slob either.
 
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