your money

How Giving Our Kids a Little Less, Gives Them More

Holly Lichtenfeld | January 1, 2016 4 MIN READ

I’m starting to think that the adult-kid money talk lives in the same territory as the birds and bees chat. The good news is that while kids are squeamish about talking to their parents about the latter, they do want our help with the former. Junior Achievement, a non-profit organization that conducts an annual teen finance survey, found that 84% of teens look to their parents to learn money management, yet more than a third of parents don’t discuss money with their children. Don’t let the common parent questions—“Shouldn’t I just let kids be kids?” “How do I start the conversation?” “How much do I really need to tell them?”—be a roadblock to valuable learning opportunities.

The Junior Achievement survey unearthed some other interesting findings: about a quarter of teens admit they don’t understand budgeting, one in five don’t know how to use credit cards, and roughly a third don’t know how to invest. As kids grow into young adults this translates into real-life issues. A study by Ohio State University found that young adults are racking up credit card debt at a more rapid rate than other age groups, and that they’re slower at paying it off.


Since adults are just as uncomfortable talking money with their kids, as they are the facts of life, it’s time for an intervention. The first place to start is by teaching kids the value of money. This is the basic building block of responsible personal finance. We all want to give our children everything we can, but often the best we can give them is a little less.

Here are three steps to help kids grasp the concept:

#1 Tooth Fairy Inflation: The days of a quarter under the pillow are long gone. Today five percent of American children get $20 or more for each tooth. That translates to $400 per kid per mouth. That’s a lot of cash in the piggy bank. It’s important to be thoughtful about the amount given, whether its tooth fairy cash or allowance. For example, if a child gets $3 per week for allowance you can help them to figure out that it will take 3+ months to save up to buy that $40 item they want, or if they get $5 a tooth, it would take eight teeth. This gives them a sense of the value of money; compared to if they are able to easily grab a stack of twenties as the result of losing only a couple of teeth.

#2 Let Them Make a Bad Purchase Decision: Have them do it young, and learn a lesson. My son got very excited about a spy watch that was advertised everywhere he was online. He kept asking for it for months. I suggested that he use his own money to buy it, if he really wanted it. The watch was $60 plus shipping; he had about $68 in his piggy bank. He was super excited when it arrived, but that faded quickly. He was very disappointed with the lame functionality. That was five years ago, he still remembers it, and since then he has weighed purchases he makes with his own money carefully. Plus he also does extensive online research regarding product reviews. For this to work you need to have followed #1 and avoid tooth fairy inflation. They will only remember the mistake if they feel the loss of the money they spent.

#3 Thoughtful Purchasing: Here are two more ways to help kids understand what money is worth. The first is the gift list, which can be easily managed and updated in the notes section of your cell phone. The idea here is that when a child (FYI this also works for adults) sees something they want, it’s added to the list. The list will be used when there’s a gift-giving occasion. By putting the item on the list, the kid feels like an action has taken place and they haven’t gotten an outright “no.” When you get closer to the gift giving event you have the child review the list. What often happens is stuff that was once a must have is no longer important. This is an opportunity to point out that it was a “fleeting want”, and now the gift money can be spent on something with staying power, that they really want. The second thing is to help them make a plan when there’s an expensive item on their list. We owned a Wii and my kids wanted an Xbox. I felt like one gaming system was plenty and I didn’t want to buy them another. Well, the Xbox stayed on the gift list for a long time, so I suggested we make a plan. The kids did research and found the system they wanted and where they could get the best price. They then both asked for gift cards for their birthdays from family. They fell short so they each used some money from their savings.

Of course sometimes you simply want to give your child an amazing, exciting gift. A surprise present is one of the most wonderful things to both give and receive. What we are aiming for is the sweet spot where there’s a balance between joyful gifting and thoughtful purchasing. This is where the value of money is discovered.

A few thoughtful steps and considerations will help get the kids in your life on their way to a healthier relationship with money.

Holly Lichtenfeld
Holly Lichtenfeld
Holly Lichtenfeld
Holly Lichtenfeld
Holly is a regular contributing author to EverBank Insights, sharing practical tips and insights on a range of personal finance and money management topics. She is an entrepreneur and private business owner ( and has previously held positions at such companies as Morgan Stanley and Dun & Bradstreet.

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