2141: Beyond The Allowance: Raising a Frugal Kid by Shannon McLay with Frugalwoods on Teaching Children about Money

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[00:00:49] This is Optimal Relationships Daily, Episode 2141, Beyond the Allowance, Raising a Frugal Kid by Shannon McClay with FrugalWoods.com.

[00:01:00] Hello everybody and welcome welcome to our parenting leg of the week here on ORD.

[00:01:05] I'm Greg Audino, happy to be here with you once again and this time to share an article for the parents out there.

[00:01:11] We'll be hearing from FrugalWoods.com, which is a site that's more regularly featured on our finance show, Optimal Finance Daily.

[00:01:19] But in this case, parenting and finance come together as we seek to learn about how we can raise frugal children.

[00:01:26] So let's get into the article now and optimize your life.

[00:01:33] Beyond the Allowance, Raising a Frugal Kid by Shannon McClay with FrugalWoods.com.

[00:01:41] I love my son more than life itself.

[00:01:44] However, he was one of those kids who truly embraced the terrible twos and then aged right into the trying threes.

[00:01:53] He challenged every last decision we made for him, except his clothing choices.

[00:01:58] Miraculously, he did not have an opinion on his outfits.

[00:02:02] He is my first and only child, and as most parents know, there is no handbook for making the best parenting decisions.

[00:02:09] And rather than read books about his behavior, I chose to take the organic approach and go with what felt best to me.

[00:02:17] Not surprisingly, what felt best to me was that I was always right and he was always wrong.

[00:02:23] And I knew that every pushback was a battle, and the only way I could prove my superiority was to win each battle.

[00:02:30] Fortunately, my husband was, has been, and always will be on the same wavelength as me as far as winning battles at home.

[00:02:38] So we had multiple dinners that ended with all of us crying at the table.

[00:02:43] I was never embarrassed to leave Target when my son was acting up about something he wanted,

[00:02:47] and when I made a threat about a punishment.

[00:02:49] I always carried through on it, including throwing a new toy down the garbage chute at our apartment building.

[00:02:55] It was not one of my finest moments, but I was determined to win each and every battle at all costs.

[00:03:02] The good news and silver lining to all of this home drama was that it paid off.

[00:03:07] Once my son crossed over to four, the painful lessons he learned through each family battle started to sink in,

[00:03:14] and he began to understand who was in charge at home.

[00:03:17] Little did I know that these battles would present the perfect training grounds for teaching him about good money habits.

[00:03:24] You see, in training my son to understand that I was in charge, I was learning the value of patience in educating him.

[00:03:31] Even though we had the same dinner battle every night for 740 nights straight, he didn't start to learn until night 741,

[00:03:40] and I developed the patience to wait 740 nights until he did learn.

[00:03:44] I employ this same patience with our money lessons.

[00:03:48] Surprisingly, he is much more receptive to money conversations than he ever was to eating his chicken,

[00:03:54] but I still have to remain consistent in what I am teaching him.

[00:03:58] When Will turned five, we started having money talks with him.

[00:04:02] As he received cash gifts from family and friends, we decided to let him use the cash as he wished.

[00:04:10] We kept his cash in a plastic sandwich baggie and allowed him to make his own choices.

[00:04:15] This led to a disastrous fail on his part of spending every last dollar.

[00:04:20] He was devastated to realize he had nothing,

[00:04:23] and I was excited for the teaching opportunity presented to me to help him learn about making smart money choices and saving versus spending.

[00:04:32] A year later, his baggie grew to all-time highs,

[00:04:36] and he was so proud of himself that he celebrated by spending more of his money,

[00:04:40] which led to another great teaching opportunity that I took advantage of,

[00:04:44] and we spoke about earning more money and selling some of his toys on eBay.

[00:04:49] Another year has gone by, and we are now discussing investing some of the baggie money in a UGMA account,

[00:04:55] where we will allow him to pick the stocks he invests in,

[00:04:58] and we will review his account with him quarterly just as I would with my clients.

[00:05:03] As I tell many people, my son is the most financially fit person I know,

[00:05:08] and it fills me with great pride to watch him make money choices and have in-depth conversations with me about his money.

[00:05:15] However, it has taken a great amount of teaching and patience from my husband and me to get him to this point.

[00:05:21] Just as he now eats everything that is put in front of him for dinner after 740 nights of fighting,

[00:05:27] he now makes informed money choices after 740 days of money talks.

[00:05:33] We cannot expect our children to understand money or make smart money choices

[00:05:38] if we only talk to them about it on holidays or every other weekend,

[00:05:42] just as we cannot discipline them and teach them proper manners if we only do it every so often.

[00:05:48] You need to make money talks a central theme in your home

[00:05:51] and look for opportunities all the time to teach a new money lesson.

[00:05:55] Our neighbor drove a new car to the bus stop a few weeks ago,

[00:05:58] and I shared with Will that we would never drive a car like that.

[00:06:02] He asked why, and I plainly ran through the numbers with him

[00:06:05] and explained that we could travel to Italy multiple times for that one car,

[00:06:10] and asked if he would prefer Italy or the car.

[00:06:13] Not surprisingly, he chose Italy.

[00:06:16] We have been speaking about money with Will for three years now,

[00:06:19] so this subject is far from taboo,

[00:06:22] and I think that it is healthy for him and for us.

[00:06:25] As he ages, we include him in more family finance decisions

[00:06:29] and ask for his opinion,

[00:06:31] and this not only helps him with his own money choices,

[00:06:34] but he learns how we make them as well.

[00:06:37] Our conversations have evolved as he has

[00:06:40] because we've made it a habit in our home to continuously teach him good money skills,

[00:06:45] just as we made it a habit to teach him good manners.

[00:06:52] You just listened to the post titled,

[00:06:54] Beyond The Allowance, Raising a Frugal Kid

[00:06:58] by Shannon McClay with FrugalWoods.com

[00:07:01] and I'll be back with my commentary in just a sec.

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[00:08:23] Okay, and thank you to Shannon for offering her take today.

[00:08:27] A lot of important messages delivered about how to talk to our kids about money.

[00:08:31] Obviously it's great to lead with these lessons in financial responsibility

[00:08:35] as she's pitched today.

[00:08:37] But I would also encourage parents to think about the other side of the coin too.

[00:08:42] Most financially savvy adults are still well aware of

[00:08:46] at least occasional urges to spend outside the budget,

[00:08:50] be it on something spontaneous or something that we've wanted for a while.

[00:08:54] So it's important to talk to kids about this side of the coin as well.

[00:08:59] We can speak to them about this very human side of spending too

[00:09:03] so that a sense of balance is instilled,

[00:09:06] better enabling them to not suppress any random spending urges they might get.

[00:09:11] Because if these feelings are completely bottled up,

[00:09:14] like any other bottled up feeling,

[00:09:16] there's risk of overindulgence down the road.

[00:09:19] So while financial literacy is a wonderful concept to teach kids,

[00:09:23] even as young as Shannon's son is,

[00:09:26] we also don't want to teach it so aggressively

[00:09:29] that kids don't feel as though they're allowed to have choices,

[00:09:32] allowed to be imperfect with their spending from time to time,

[00:09:35] or make irresponsible purchases once in a while.

[00:09:39] So making room for moderation and exceptions,

[00:09:42] as always, is my take for today.

[00:09:44] And with that, I thank you so much for tuning in as we wrap up another episode.

[00:09:48] I hope you enjoyed this one, parents.

[00:09:50] And if so, do come back tomorrow for another parenting post.

[00:09:53] That's where your optimal life awaits.