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The word of the year for 2008, according to the American Dialect Society, was “bailout.” A picture may be worth a thousand words, but boy, does that one word speak volumes. For kids growing up today, hearing terms like “bailout,” “credit crisis” and “stimulus package” might sound like cacophony. We live in what Gayle Reaume calls “a consumption culture,” one where we tend to think, “we should be able to have everything we want … spend all your money and when you run out. Borrow more.” It’s the model our children may copy and yet, for many of them, the new economy means they can hear their parents’ wallets snapping shut. What they’re not hearing is anybody talking about why or offering ways to help. “We always want to make sure our kids are okay and comfortable and never have to worry about money,” says Reaume, “we don’t want them to worry about it … but they should know about it!”
“75% of parents now report they would rather talk to their kids about sex than about money,” says Reaume, who started the Money Academy here in Austin. She laughs, “They know about sex, they have children!”
The underlying message is that so many of us don’t really get it when it comes to money. With a series of after-school clubs and summer camps, Reaume, through the Money Academy, is turning those difficult conversations into lessons. She started the academy after a paradigm shift of her own. “When my daughter was young, I realized I was caught up in a money trap,” she explains. Get up in the morning, work to make money, pick up daughter from child care, go home, make dinner, go to bed, get up in the morning and repeat – again and again. “The only way to get income,” Reaume realized, “was by trading my time.” That inspired her to change and to teach her daughter to have a “different financial future.”
So, the challenge for parents in teaching our daughters and sons to respect and understand money is to do what we say and not what we did. Consider this: Reaume has a 14-year-old daughter. That daughter makes $40 a week from a bubble gum vending machine she installed herself at the Shady Grove Restaurant in South Austin. $40-a-week in passive income. That’s just part of what she makes. She puts her earnings into CDs and is about to install another gumball machine at a second restaurant.
“Kids have no idea where their money comes from,” explains Reaume. “There is sort of this layer that’s between us and money … we’ve lost track of the source.” So we offer some ‘news you can use.’” Parents can start by making sure “kids know how much things cost when they have their list of wants.”
1. Be transparent about finance – what is the family spending money on?
Kids need to know how we spend our money on them, how and why we make our choices, and how much is allocated to them. “In an affluent culture, we just give our kids stuff without understanding at all what the real expenses are.”
2. Determine about how much of your families’ resources are going to be devoted to things that your children want or need.
For example, Reaume says if you say “I’m willing to allocate $30 a month for your entertainment … kids need responsibility over that money that is going to be spent on them anyway.” But, there is a catch, Reaume adds, “I highly recommend that it be less than what they’d actually spend, so they are resourceful in spending it and in finding ways they can create more.”
3. Give your child the money you would spend.
Give her the $30 of entertainment money for example, and let her manage it. Even if she gives the entertainment money right back to you when you pick up the movie tickets, it’s still hers to spend and manage.
4. Teach kids to invest.
Kids need to know more than just how to buy stuff, but to have money makes you more money. There is a reverse to that. If they already spent their movie money, but then get invited to see the latest blockbuster, be kind, lend the dough to go – with interest.
Wise tips spill from Reaume’s mouth faster than a writer can keep up. She offers a caveat, “It’s important for them to know you are giving your child money you would have spent on them anyway. The key is you are giving it to them, to manage, to lose or grow, but most importantly to learn from.” She remembers when her own daughter had “$20 stolen out of her wallet one of the first days of middle school … she doesn’t carry cash around with her any more … I could have told her that, but she wouldn’t have listened to me.” She adds that children are never too young, even if you are offering a 3-year-old a monthly allowance to buy stickers. “Have them do it when they’re young so the mistakes are small.”
Now for some truth in reporting. This writer has been haggling with a middle-schooler over the question of a cell phone. So how might Reaume deal with that? She suggests, rather than dictating, “it’s not something we can afford right now,” change the conversation. Try, Reaume says, “we agree you need a phone, here is what your dad and I are willing to pay.” Have the child research to find the right plan, and then offer options, “so you might want more minutes than that … or, texting … it may cost $5 more a month, so how do you imagine you could get that money?” The child is empowered and thinking. She says the next thing to do is give the child the money you would spend and let him manage it, “even if he’s handing the money right back to you.” If he spends the money on video games he’ll have to borrow the phone bill money from you – with interest of course.
An interesting footnote: Gayle Reaume’s parents grew up during the Depression. When one grandfather lost his job, the family “took up residence in an abandoned farmhouse with no utilities.” Her dad and his siblings got creative, competitive, even playful, trying to come up with ways to bring home money. Life is not always convenient when raising a family. As Reaume says, we don’t want our children to worry about money, but they do need to appreciate where it comes from. If we lift the taboo, perhaps in the future we’ll avoid “bailout.”
More Info:
This article is part of a series that has sprung from last fall’s Girls Now Conference. The goal of the conference was to empower our teen and pre-teen daughters as we
raise them to become women. For more information on Girls Now and ways to
help these young girls, go to
www.girlsnowconference.org.
The Money Academy offers after-school clubs and summer camps for children teaching “financial literacy.” Classes start for kids about 7 years old and run through the teenage years. The goal is to teach children how to manage money, donate, save and grow it.
Visit www.themoneyacademy.net for more information.