Thursday, August 28, 2008

What are kids REALLY thinking about money?

"When I grow up, my bills won't be so high."
"In real life people don't spend money every day."
"When I graduate from college, I'll make a lot more than this."

After teaching 10 – 12 year old scholars through the BELL program, I gained some pretty good insight into misconceptions kids have about money.

For six weeks I had the kids manage a checking account. They received “paychecks” every other week, they had to ”spend” money every day on grocery shopping, supplies, and other incidentals, and they received utility bills that were due periodically throughout the program.

The kids loved managing the paperwork and doing the math to keep their check registers updated. Their “shopping” cards would say things like “You dropped your cell phone in the toilet. Pay $85 for a new one,” or “Buy a gift for Mother’s Day. Pay $50.”

The biggest complaint heard was that the kids didn’t want to spend their money! After receiving their $500 paycheck ($391 after taxes), they felt that it was unrealistic that they should have to spend so much of the money. They made comments like, “In real life people don’t shop and spend money every day.” Other kids couldn’t believe the amounts of the bills were realistic. “I won’t spend $87 every month on an electric bill. I’ll use less than that.” And ultimately, many kids thought they would make much more than the amount I was giving them, saying things like, “When I graduate I’ll make $80,000 a year, so I won’t have to worry about bills.”

The reality is that we are not sharing with our kids the actuality of what it costs to live when they get older. Some of us teach our kids to save and possibly how to shop for bargains, but many kids don’t understand what goes into the day to day life of living on a realistic salary.

It really comes down to teaching our kids the value of money. The only way they are really going to understand this topic is to show them what we spend on a daily basis to live. Let your kids see what’s in the checking account. Help them understand what you as parents bring home as a salary and how it is spent to run the household.

Many parents are not comfortable exposing their personal financial details to their teenagers, but I believe the information is invaluable. How else will kids understand how much money actually comes into a home and how much is spent for it to run? Yes, you can tell them that $1,000 is not really a lot of money to live on, but until they actually try to pay some bills with it, they really won’t know. Usually teens are only aware of the money needed to provide for their needs, like a car and cell phones.

However, opening up your financial world to your teens could pose other problems as well – forcing you, as a parent, to take a clear look at your own financial situation. Many parents don’t have a clear picture themselves at what’s going on with their money. Why would they want to show their 16-year-old son details on how they spend money if they don’t want to go through the math themselves? Especially when money is tight.

We have to start changing our attitudes about having money, the daily managing of it, and communicating information about it to our family. It’s a huge obstacle to overcome in allowing our economy to heal during these difficult times.