I was chatting with a good friend of mine last week. The topics of kids and money came up, as it inevitably does with me 🙂 He mentioned that his youngest daughter doesn’t like to spend. She will conveniently forget her money at home and get her older sister to buy candy for her. The older sister, on the other hand, is a spender. She will happily spend all her money without worrying about the future.
I was thinking about this afterwards. I wonder where these habits come from. I suspect they can be quite arbitrary. Perhaps your very first experience with money as a child is buying something expensive that you regret. That can really stick with you. From that day forward, you avoid spending and develop a habit of being afraid to spend. This may carry into adulthood if left unchallenged.
A similar thing happens with food. Many young kids decide that they don’t like certain foods (like avocado, shrimp, eggs, etc) based on a single negative experience, only to later change their minds. They change their minds because their families and society regularly challenge them. Maybe they try shrimp again at summer camp, or maybe granny gets them to try some avocado toast and they realize they’ve been missing out all along!
I think this kind of ongoing, corrective challenge happens far less with money. Many kids don’t get an allowance, their parents just give them money as they deem it appropriate. Or if they do, the money just accumulates unspent until the allowance is eventually discontinued. So many kids develop some very arbitrary and possibly harmful money habits that never get corrected.
I think it is our job as parents to keep challenging our kids and to provide them with a safe environment in which to learn. Being able to manage your money is a very important life skill. One day your child will have their own money and face all kinds of temptations. For example: young adults can get into all sorts of trouble with credit cards if they don’t have experience with money.
Rather let them learn as children, even if it means letting them blow their whole allowance on in-app purchases. They will quickly learn from such an experience. I really don’t think there’s a substitute for this. They need to feel and experience that tension first-hand: my money is finite and I need to think carefully about what I spend it on. Too many parents shield their kids from this reality without realizing the downside.
I follow the work of Peter Gray, a research professor of psychology and neuroscience, who for many years has been studying kids and play. Just last week he wrote an article about why kids play in ways that involve degrees of danger - see here
The short answer: “By doing things that are moderately dangerous and elicit symptoms of fear (such as a pounding heart, rapid breathing, and trembling muscles) youngsters learn they can handle fear. They learn they can feel the symptoms of fear and not fall apart either emotionally or physically. This is an extraordinarily valuable lesson, because all of us … are going to face some real emergencies in our lives”
Similarly, all kids will one day face the challenge of having many desires but limited money. My bet is that kids who have been exposed to this from a young age, with support from their parents, will be much better prepared.
