Raising kids who are grounded, generous, and smart about money. – Modern Mrs Darcy

Things I never expected to say: according to Ron Lieber’s definition in his new book The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, I qualify as “wealthy”: I have everything I need and (insatiable book lust aside) most of what I want.

This makes me all kinds of uncomfortable, even though Lieber freely admits his definition is different than most people’s.

Will and I both read the book recently because our kids have started asking us tough questions about money. The typical stuff: Why won’t you buy me black boots? Can’t we afford to go out to eat? Why can’t I buy that LEGO set?

We can’t literally buy our kids everything. But relative abundance—we could afford those boots, or Chinese takeout—has its challenges. We could buy those boots, but we won’t. When it comes to kids and money, Lieber says “won’t requires more conviction than can’t.”

Since reading the book, Will and I have discovered some things we’re genuinely getting right with our kids. We weren’t exactly surprised to find some areas that need improvement, but now we’re inspired to actually tackle them—and soon.

What we’re doing right:

WE TALK ABOUT MONEY WITH OUR KIDS.
Money talk isn’t taboo around here. We talk about what we buy, and what we don’t, and why—from the grocery bill to the big picture stuff.

We went to a ton of trouble to rent our old house last spring (and we’ll have to do it again soon), and at one point Sarah asked me why we were bothering when we could have just sold it. I was surprised by her question: it hadn’t occurred to me she didn’t understand. When I told her it’s because now we get a rent check every month for x-number-of-dollars, she got it. And she offered to help.

WE TALK ABOUT HOW MONEY FITS INTO OUR LARGER VALUES
Our kids know we give money to church each week (though they don’t know how much). They can tell you why we’d rather buy Christmas gifts from cottage industries than Target. They know (after a recent discussion) that we could afford to go out for tacos every week, but choose not to.

Our neighbor just got a new minivan; Will and I both drive old cars. Our kids told us we should get shiny new cars, too. We talked about how we really aren’t car people, but we care deeply about taking big (and expensive) vacations to visit far-off friends and family. That’s a trade-off we make because those are our values.

WE ENCOURAGE OUR KIDS TO SAVE
From a young age, our kids have all had ways to save money for the short term and the long term. Their wallets hold their petty cash (and rarely go to the store—that’s important!); larger Christmas and birthday checks go straight into their savings accounts. Their default pattern for their whole lives has been to save first, then think about spending.

WE GET PRACTICAL
Will helped Sarah make a spreadsheet to track her costs for her latest business venture. Jack recently rolled up every coin in his piggy bank and exchanged it for bills at the bank. We helped our kids calculate how much it costs to make tacos at home vs. eating at our favorite taco place.

What we could be doing better:

START GIVE/SAVE/SPEND JARS
Lieber believes the best way to get kids started with making financial decisions is to set them up with three transparent containers or jars labeled give, save, and spend. It’s up to us, the parents, to set guidelines for how to distribute their money between those jars. We don’t have any system in place for this right now.

START AN ALLOWANCE FOR OUR KIDS
Lieber’s recommendation is to give each child 50 cents to a dollar for each year of their life. (He doesn’t believe chores should be required, this is discussed at length in the book.) This is their learning money. Lieber says you want to give them “just enough allowance so that they can get some of the things they want but not so much that they don’t have to make a lot of hard choices.” I’m starting to think of an allowance as their financial “training wheels.”

Along with the allowance comes firm guidelines about what the kids are expected to spend it on: what they must buy for themselves, and what we will buy for them. Lieber says one of the hardest things about parenting in this context is establishing these guidelines and the reasons behind them. The challenge isn’t just articulating them to our kids: it’s articulating them to ourselves.

GIVE THEM FREEDOM TO MAKE MISTAKES
My inner maximizer has been way too concerned with “helping” my kids how to spend their money wisely. There is something to be said for this. But over time, kids need to learn—through trial and error—how to make their own decisions. Adults have to make tradeoffs; kids need to learn, too. Childhood is their practice round.

This isn’t just a nice abstract value: many of today’s twentysomethings carry crippling amounts of credit card and student loan debt. Lieber’s mission for the book is to teach the next generation how to be better at money than our parents were, and to be better at talking about money than our parents were, so that they can increasingly WIN their twenties financially. 

I recommend reading the book if you’re interested in exploring this topic further.

My family is just getting started with this subject: what tips do you have for teaching kids to be smart about money, based on your past experience as a child or your experience now as an adult?