How to teach young kids to be frugal?

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KlangFool
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Re: How to teach young kids to be frugal?

Post by KlangFool » Sun Dec 14, 2014 11:44 am

TS,

I came from a poor small business family. Our goal is not to teach our children to be frugal. Our goal is to teach our children to be value conscious.

1) We try to get our children to make their own financial decision as early as possible. We gave $25 for their birthday and X'mas. They choose how to spend or save those money.

2) We took our children to garage sales and thrift store shopping regularly. They get to see and shop how some others pay full price for those toys and books. And, they could buy it for penny on the dollar on many of those unopened toys and books.

3) Books. We bought many books. In many cases, instead of buying the latest book, if we wait a few months, we could buy the same book for a lot less. For many of the older best sellers, we could get them used for $4 each including shipping at

www.betterworldbooks.com

Or buy it used from amazon.com

4) Value for money. Instead of spending a few dollar each trip to Starbucks. I could spend $35 every month and get 2 pounds of Gourmet micro-roasted coffee from Sweet Maria. Superior coffee and lower price.

In summary, we are training our children to make better financial decision. We lead this by example. We show our children how we shop for each item and how we made our decision. We let them make their own decision on many of their purchases.

KlangFool

Leemiller
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Re: How to teach young kids to be frugal?

Post by Leemiller » Sun Dec 14, 2014 11:58 am

^^^
I really like the concept of "value conscious!"

I have a friend at work who tells her kids we can have anything we want but not everything we want. She is teaching them to prioritize what is important which I respect.

Honestly, I almost never take my 3 year old into a store that isn't a grocery store so she isn't focused on buy me this or that yet. Plus we almost exclusively watch Netflix so limited if any ads for products. For Christmas she is getting a little cash register and when she's older I plan to have her read investment books and talk to her about that. For me, my focus is teaching investment skills & to focus on that is critical.

KlangFool
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Re: How to teach young kids to be frugal?

Post by KlangFool » Sun Dec 14, 2014 12:14 pm

Leemiller wrote:^^^
I really like the concept of "value conscious!"

I have a friend at work who tells her kids we can have anything we want but not everything we want. She is teaching them to prioritize what is important which I respect.

Honestly, I almost never take my 3 year old into a store that isn't a grocery store so she isn't focused on buy me this or that yet. Plus we almost exclusively watch Netflix so limited if any ads for products. For Christmas she is getting a little cash register and when she's older I plan to have her read investment books and talk to her about that. For me, my focus is teaching investment skills & to focus on that is critical.
Leemiller,

<<Honestly, I almost never take my 3 year old into a store that isn't a grocery store so she isn't focused on buy me this or that yet. >>

We do not have this problem. If they want it, they buy it with their money. And, when they are out of money, they cannot buy anything. They are 17 and 18 now. Each one of them has about 10K saved in Vanguard mutual fund.

Put your children on a budget and / or allowance. Let them set their own limit and prioritize their own spending.

KlangFool

kithwang
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Re: How to teach young kids to be frugal?

Post by kithwang » Sun Dec 14, 2014 1:42 pm

Thanks everyone for all the tips! I do like the taxes idea and found Silver Spoon Kids at the library.

epilnk
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Re: How to teach young kids to be frugal?

Post by epilnk » Sun Dec 14, 2014 7:01 pm

Grt2bOutdoors wrote:
DonCamillo wrote:Not much can be done with the two year old yet; not old enough to understand. The key for the five year old is to teach deferred gratification. Many parents do this with an allowance. The key is the the child has to save for a period of time to get something they want. They have to learn to forgo a little treat today to get a bigger treat tomorrow.
Nonsense! My 2 year old had a piggy bank and knew how to put coins into it early on, the concept of saving can be taught much younger than you may think. The allowance should come with some sort of strings attached - clean up your room, etc.
I started my 4 and 3 year olds on $.75 and $.50/wk allowances and brought them to the dollar store to spend it. The whole world of consumerism is accessible to a preschooler there, which blows their tiny minds. They had to "save up" for any purchase, but the fixed price allowed them to buy anything in the store without requiring more math than they were ready for. It also allowed them to do comparison shopping: What is worth more, this plastic gun, this bag of candy, or this bag of chips? What is worth more, a 14 oz bag of chips you like or a 20 oz bag of chips you hate? (You'd be surprised how many fails were required for that lesson.) One time the 3 year old decided what he really needed was pliers. I kept stepping the math lessons up, for example I always paid sales tax but when they got a bit older made them calculate it first. We spent hours in the dollar store, so many lessons there. Eventually they figured out that a $1 gun that breaks immediately isn't much of a bargain, and we moved on.

epilnk
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Re: How to teach young kids to be frugal?

Post by epilnk » Sun Dec 14, 2014 7:11 pm

retiredjg wrote:Speaking of lying, I remember my mother telling me that people who get everything they want get "spoiled" and she didn't want us to be spoiled. So she was not going to give us everything we wanted and that was that. She never pretended there was no money.

Of course, I didn't get it at the time but I accepted the answer. Had she lied and said "there is no money for ___", I would not have accepted that because somehow I would have known she was not telling me the truth (although I might have been mistaken about just what the lie was).
We don't lie either, and the kids sensed early on that we are not terribly limited by finances. We do prioritize frugality - academic and medical needs exempted - and framed it as a matter of values. We spend on everything we need to have "enough", freely on the things that really matter, save for the future, treat ourselves to a modest level of indulgences, and at the end of the year we look back and see how well we did and choose how much to donate to charity for those who do not have enough. My children felt this was quite reasonable.

dgdevil
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Re: How to teach young kids to be frugal?

Post by dgdevil » Sun Dec 14, 2014 7:20 pm

Leemiller wrote: For Christmas she is getting a little cash register
Cool! I got one as well, as I had requested despite not being able to say "register" properly. I think I lost interest fairly quickly, though.

Laura
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Re: How to teach young kids to be frugal?

Post by Laura » Sun Dec 14, 2014 8:45 pm

I also think that making sure kids just understand basic finance is key. My son's university required all freshman to take a class that had some finance information as part of it. My son reported that most of his classmates did not know the difference between a checking and savings account and most of them thought you should carry a balance on a credit card to build your credit score. He was very pleased to have learned this before he arrived at school. While it is important to focus on frugality and value, making sure kids understand the difference between debit and credit cards is just as important. I do give the school credit for focusing on student debt and what it means for the future.

That said, there are a few gaps I have identified with child number one that I am now working on with child number two in preparation for his launch from the nest. Do your high school children know how to determine if a doctor is in network or out of network? Do they even know there is a network? :oops:

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

AtlasNerd
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Re: How to teach young kids to be frugal?

Post by AtlasNerd » Sun Dec 14, 2014 9:19 pm

Cheap-as-dirt 22-year-old here. One of the best things my parents ever did for me was set up my "allowance box".

When I was about 7, I received ten dollars every month for doing my chores. I had a little shoebox that my parents bought stickers for me to decorate however I wanted, and they gave me ziplock baggies that represented each thing I wanted my money to go towards. It was usually basic back then, church, a video game, and savings. Then I would segment my allowance every time I got it, putting a certain percentage in each bag. It was also a great way for me to learn fractions and percentages.

I thought it was fun. I even made a pretend allowance for my dolls, and wrote out how much she would have to pay in rent, etc. But then again, I ended up majoring in Accounting, so maybe I was just born a budget nerd.

But seriously, just find a way to make it into a game that they can take and run with. All my parents did was give me a shoebox and a ziplock bag. That mixed with a Bill Cosby monopoly episode, and I was trying to figure out how much my Doctor Barbie would make a week without tax.

mhalley
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Re: How to teach young kids to be frugal?

Post by mhalley » Sun Dec 14, 2014 10:18 pm

Came accross this board game, perhaps it would be helpful.

Give Your Child a Financial Head Start With CASHFLOW for Kids.

With CASHFLOW for Kids, your kids have fun and you have peace of mind. That's because CASHFLOW for Kids is a fun game with exciting challenges that is sure to please any little tike, and it teaches valuable financial lessons in a way that is easily understood by young children, so you can rest easy that you're giving your child a financial head start by giving them a solid financial education.

CASHFLOW for Kids is an educational board game that simulates real life financial strategies and situations in a context that engages and educates your child. You child's school teaches them how to work for money, but CASHFLOW for Kids teaches them how to have money work for them. As a simulation, your child learns valuable lessons and gains priceless insights into how money and investing work - all with play money!
http://www.amazon.com/Rich-Dad-CASHFLOW ... C15E1A216M
Mike

epilnk
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Re: How to teach young kids to be frugal?

Post by epilnk » Sun Dec 14, 2014 11:40 pm

Laura wrote:I also think that making sure kids just understand basic finance is key. My son's university required all freshman to take a class that had some finance information as part of it. My son reported that most of his classmates did not know the difference between a checking and savings account and most of them thought you should carry a balance on a credit card to build your credit score. He was very pleased to have learned this before he arrived at school. While it is important to focus on frugality and value, making sure kids understand the difference between debit and credit cards is just as important. I do give the school credit for focusing on student debt and what it means for the future.

That said, there are a few gaps I have identified with child number one that I am now working on with child number two in preparation for his launch from the nest. Do your high school children know how to determine if a doctor is in network or out of network? Do they even know there is a network? :oops:

Laura
I think a debit card is excellent training for young teens - it gives them experience managing an account/budget in a way that they can't get into too much trouble, and it's a bit more protected than carrying cash. My 13 year old knows that he does not have a line of credit, that what is in his account is all there is, and that it is his responsibility to keep an eye on it. If he overdraws it the penalties will be his. I almost hope he does; I'd prefer a cheap lesson now to a pricier lesson later.

pinecone
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Re: How to teach young kids to be frugal?

Post by pinecone » Tue Dec 16, 2014 10:59 am

One of my earliest "financial memories" was when I was six years old. I was with my mother at a craft bazaar, and I was admiring some tiny hand carved animals. One looked exactly like our family pet, and I wanted it with every fiber in my being. I showed it to my mother and begged her to buy it in the way that kids often do. She said "You just started getting an allowance and have your own money now. If that's what you want to spend your money on, you don't have to ask me."

When I handed over my money, I felt an independence that I'd never felt before, and it felt amazing! As a 6 year old, I didn't get too many opportunities to feel independent. From that day, the feeling of having my own money, and the freedom that represented, was indelibly marked on my brain.

It's been almost 50 years, and I still have that little animal. He's been like a savings amulet, because every time I look at him, I am reminded again how good it felt to make my very first financial decision. (At the time his cost of $2 represented 1/2 my net worth(!), so it was probably a questionable financial decision, but I think my "investment" paid off :D) My definition of financial independence has long since changed, but it was that day's lesson that set me on course.

flyingaway
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Re: How to teach young kids to be frugal?

Post by flyingaway » Tue Dec 16, 2014 11:02 am

Yesterday I mentioned the word "frugal" to my high school son. He told me impatiently that he does not know what it means and I should not bother him.

epilnk
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Re: How to teach young kids to be frugal?

Post by epilnk » Thu Dec 18, 2014 1:25 pm

flyingaway wrote:Yesterday I mentioned the word "frugal" to my high school son. He told me impatiently that he does not know what it means and I should not bother him.
Understandable. I know I hate to be bothered when vocabulary slips my mind. For example the word "allowance" can be a bit slippery.

sschullo
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Re: How to teach young kids to be frugal?

Post by sschullo » Thu Dec 18, 2014 1:32 pm

epilnk wrote:
flyingaway wrote:Yesterday I mentioned the word "frugal" to my high school son. He told me impatiently that he does not know what it means and I should not bother him.
Understandable. I know I hate to be bothered when vocabulary slips my mind. For example the word "allowance" can be a bit slippery.
Now that's what we call in our profession, "a teachable moment!" One of the best.
Last edited by sschullo on Thu Dec 18, 2014 1:54 pm, edited 1 time in total.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

epilnk
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Re: How to teach young kids to be frugal?

Post by epilnk » Thu Dec 18, 2014 1:49 pm

pinecone wrote:It's been almost 50 years, and I still have that little animal. He's been like a savings amulet, because every time I look at him, I am reminded again how good it felt to make my very first financial decision. (At the time his cost of $2 represented 1/2 my net worth(!), so it was probably a questionable financial decision, but I think my "investment" paid off :D) My definition of financial independence has long since changed, but it was that day's lesson that set me on course.
When my 5 year old asked me for a Gameboy I said no, I wasn't buying him video games. He asked, "If I save my own money can I buy it for myself?" My candy lover had a $1 a week allowance so I said, "sure, go for it" - what were the odds? But sure enough, week by week, the total climbed; he saved the $10 he got from his grandparents for his 6th birthday and kept right on going, so I located a used Gameboy that he could buy for under $40, then contributed a game or two as a reward (at 6 he didn't have quite that much foresight) and quietly paid the sales tax.

He's now a teen, still financially responsible, with an iphone, an Xbox, and a nintendo DSi that blows the screen off that early used Gameboy. But he still treasures that little red gameboy which has pride of place on his nightstand and still gets played now and then. I figure any 5-6 year old who can manage to buy a Gameboy with a $1/week allowance will do just fine when it comes time for a mortgage.

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