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Ask HN: How to teach young kids about money?

• giantg2 5y ago
  I think Vanguard has resources for teaching kids about money.
• jm_l 5y ago
  This may be of interest to you https://www.jefftk.com/p/bets-bonds-and-kindergarteners https://www.jefftk.com/p/bets-bonds-and-kindergarteners
  • ginko 5y ago
    Teaching a young kid to bet(i.e. gamble) seems crazy.
    • Mikeb85 5y ago
      Probably more useful than teaching them how to save with the way the economy's going.
    • xur17 5y ago
      I read your comment before reading the article, and went in with that view. The article changed my mind. The parent wasn't playing dice games with their kid, they were placing small wagers on the probabilities of things occurring. Building up a mental model for probabilties / risks seems valuable to me.
• thom 5y ago
  I am still not sure how I feel about it, but we use a thing called Rooster Money. Your kids get an account and a card, and you can give them some combination of a regular allowance and payment for chores. If you are strict in making their account the only way for them to buy stuff, it can help join the dots in their heads. As I say, I still squirm a little about this, because really they ought to do most of these chores without needing bribes, but you do what you must to survive.
• temp0826 5y ago
  Is there something like this for adults? .....asking for a friend
• walshemj 5y ago
  I do wonder with the massive reduction in physical cash this is going to be harder. My parents opened a building society (mutual ) account for me when I was in my early teens (this is in the UK)
• jimmyvalmer 5y ago
  A common but inane question. For kids without a mortage or stock portfolio, there's not much more to know than "spend less than you make," and "shop around." The lesson is less about maths than it is about impulse control.
  • MerelyMortal 5y ago
    Impulse control is import to teach/learn early on, probably before kids can even grasp the concept of money. I didn't downvote you, but I do disagree with your premise.
  • dnilasor 5y ago
    You need not look far to observe that "spend less than you make" (to your point, impulse control) is much to know, and that most people don't.
    • jimmyvalmer 5y ago
      Unclear whether we're in violent agreement. Parenting is all about evoking interests whilst suppressing urges. Since money is a means of both its importance comes out in the wash, so to speak.
    • AdamN 5y ago
      I think you two agree (as do I). So much of this thread is focused on stuff like interest, but spending less than you earn and knowing how to calculate risk over time are massively more general and useful skills to learn.
      • jimmyvalmer 5y ago
        I'd keep it at basic inequalities like "does that cost more than what I have?" Tracking continuous-time risk is more a college thing.
• lacker 5y ago
  Personally I felt like the best education in money management was the sort of video game where you are managing money. For me in the 90's it was Civilization. Money in this sort of management video game has a lot in common with managing real money. There are a lot of things you want that cost money, and you don't have enough money for everything, so you have to make tough decisions. Sometimes you should know that you'll need money in the future, so it makes sense to save. Money is really useful, so it's worth working pretty hard if you can make a lot of money. Sometimes you need to do some math to figure out if you have enough money to do something or not, and doing that math will help you make better decisions. Sometimes you can spend money in a risky way to try to make more money, and that might be a good strategy or not depending on the details, so you should dig into the details. Someone can tell you in a class, "Don't blow your money on stupid stuff", but it doesn't really sink in the way it does when you rush-buy a temple because you're impatient, then you get invaded, and you are kicking yourself that you didn't save enough money to rush-buy some chariots for defense.
  • UnFleshedOne 5y ago
    You mean you are not putting up every building in every city in civ while skimping on units? I got spoiled by bad AI...
  • hirvi74 5y ago
    I used to lightly kid about how Runescape taught me the basics of personal finance and economics. I suppose a better way to describe my experiences would be to say that Runescape fostered a scenario where I was able to learn and experiment how to handle money without many of the risks involved. Many of the lessons I learned during my time playing the game include supply/demand economics, price vs. value, 'marketing' (the term coined for day-trading items in the game), bartering/haggling, patience, discipline with money, detecting/avoiding scams, etc.. I probably could have spent my time playing that game doing something more productive and beneficial, but at least I learned some important lessons along the way.
• djbebs 5y ago
  Do they have an allowance? Let them "deposit" it with you in return for interest. Or let them "invest" it, in return for a greater allowance in the future. Make it clear to them that if they do certain specific chores, you'll pay them for it. Do not force them to do the chores, simply make getting paid for doing it an option. Bring them in to the monthly discussion of the families finances Basically you need to gamify personal finance.
  • giantg2 5y ago
    Generally agree. I would still make them do some smaller unpaid chores to understand that maintaining the household is a team effort and not everything is paid. Bigger infrequent chores are great for earning money (both from parents or neighbors), like mulching or other yard work. Encouraging them to start a "business" can be good too. I used to make and sell bluebird houses a few times per year. It teaches a lot about sales, expenses, pricing, etc that chores don't. "Bring them in to the monthly discussion of the families finances" This might not be a good idea depending on the specifics of that conversation. Also, this requires a partner who participates meaningfully in budget and finance topics.
    • jimmyvalmer 5y ago
      > maintaining a household is a team effort and not everything is paid. As much as I'd like to impart "work for its on sake" as a concept, it's really really tough on the kiddos some of whose friends get a weekly allowance for just doing homework.
      • sudobash1 5y ago
        Learning to not compare yourselves to others is another valuable lesson. I think the majority of children (and probably adults too) would be happier if we were able to really internalize this. Additionally, not comparing oneself with others will avoid the "keeping up with the Joneses" mindset, and that is going to be a big help financially.
        • 5y ago
• adamredwoods 5y ago
  If they want some toy or game, have them buy it with a 'money account' you both can keep track of. If they do chores, give them a little money and keep track on the account. I feel this simple principle teaches the work/reward/patience ethic, instead of instant gratification.
• jonahbenton 5y ago
  I worried a lot about this when my kids were little and never came up with a good approach/solution. The world is different enough to little kid brains, literally, that trying to instill the adult concept of money is like teaching a fish to ride a bicycle. Now that they are older (late teens) I see now some opportunities that were not there before. When they are little they need the emotional support and love to build the psychic infrastructure for safe, self-aware, healthy adulthood. One can play games of course with monetary values but what is happening of importance in those games is the interaction itself, those emotional dynamics, not the material. Money is a very, very refined sociological tool the purpose, context, utility, scarcity dynamics only make sense for a kid who can begin to participate in society. In most cases this doesn't start to be the case until mid or late teen years. So my advice- for little kids, model love, openness, forgiveness, care, empathy, honesty, responsibility- all those underlying traits involved in being a good human. Much later, when the time is right, they can start to learn to apply those capabilities to the domains that involve money. Best wishes.
  • gruez 5y ago
    >The world is different enough to little kid brains, literally, that trying to instill the adult concept of money is like teaching a fish to ride a bicycle. They might not understand bills, credit cards, mortgages, and 401ks, but surely it's easy to teach them the concept of resource management?
• tdrdt 5y ago
  Good money habits start with knowing the value of money. It is very tempting to buy everything for your kids, but it can be very good to let them save for something. For example let them save for a box of LEGO they want to have. While saving they might see something else they would like. The choice about whether to continue saving or buy someting else is very helpful to think about money.
• RhysU 5y ago
  Give them an allowance. Let them blow it on goofy things like bubblegum or candy bars. Eventually, they'll learn delayed gratification by realizing that bubblegum isn't as good as waiting for a toy they want to buy. They have to figure it out for themselves. Better now than when they are 18.
  • jenscow 5y ago
    Also, don't give them more than that allowance - when it's gone, it's gone.
  • AdamN 5y ago
    Being amenable to delayed gratification comes way before allowances become a thing. It may even be innate and not a learned behavior.
• perlgeek 5y ago
  Another aspect: if the kids ask what things cost, answer (truthfully). Depending on your culture, it might be weird /unusual/inappropriate to talk about how much rent you pay, how high that restaurant bill was, what you pay for a new car etc. But if the kids are supposed to learn the value of things and of money, don't dodge those questions.
  • dr_orpheus 5y ago
    One of the recommendations I have seen for this as well is basically walking through a monthly budget using Monopoly money. Start with a pile of Monopoly cash that is your gross monthly paycheck and start putting away money in piles for taxes, rent/mortgage, food, insurance, savings, etc. I think it helps conceptualize some of the relative values of things and the spending/saving they can't physically see.
  • jimmyvalmer 5y ago
    I like the idea of being forthright about the number values, but kids blab.
    • InitialLastName 5y ago
      Maybe we would live in a better-adjusted world if everyone were a bit more open about money and spending? Instead of just using consumption to signal it?
      • vmception 5y ago
        the one where you get a target on your back as soon as you get ahead? resentment because you ignore the handouts or that no handout amount is satisfactory? Nah, pass.
        • InitialLastName 5y ago
          People keep bringing this up, but this is FUD. Lots of places have public tax records and cultures of relative openness with respect to money and income, and as far as I can tell they appear to have less class strife than the US does.
• roland35 5y ago
  I don't have any particular approach right now (my oldest is only 7), but I am trying to be open about finances with them. When we purchase things at the store or online we talk about how we are spending x dollars, or that we pay for the water and electricity we use, I get paid for the work I do for my job, like that. As they get older I will definitely introduce other concepts like personal finance, checking accounts, credit and loans, investing, taxes, saving, and so on. Like any complex problem I don't think there is a simple solution, just lots of conversations over time.
• oneplane 5y ago
  While there are plenty of money or value specifics that are important to know, the basis tends to revolve around planning. Humans are very bad at predicting the future or looking ahead, so planning, having contingencies and being prepared to various degrees is the foundation for a lot of other things that make society/civilisation work.
• 300bps 5y ago
  My kids are 13-17 and are pretty good with money. When they were very little, I did the following: 1. Bought a cash register at Staples and we would have "store days" on the weekend where the kids would make stuff to sell to mom and dad. They had to learn how to use the real cash register to accomplish their sales. That cash register is one of the things that my kids remember so fondly they won't let me get rid of it. 2. Got each of them Greenlight cards almost as soon as they were available. They get real credit cards with their name on them. I have a parent wallet that I can then put money onto their credit cards either one time or assign an allowance or give money for chores, whatever. I can see everything they spend, I can stop them from spending money on certain categories and I can turn their cards on/off with the app. Works really great - link to sign up with a $30 bonus for both of us: https://share.greenlight.com/582861?share_id=7016004829708970808 https://share.greenlight.com/582861?share_id=701600482970897...
• chollida1 5y ago
  I've come to learn that kids really cant learn about the value of money until they start earning their own money. it's easy to spend someone else's moeny, its hard to part with your own once you know how hard it is to earn. So step 1 is to figure out a way to get them earning their own money, either a job or some sort of allowance. We started our kids with a job at age 12, we tried allowances before then but dropped it because it was tied to doing work around the house which we felt they should do anyway.
  • andrei_says_ 5y ago
    > but dropped it because it was tied to doing work around the house which we felt they should do anyway. Thank you for mentioning this. It may be useful for other parents to know - research shows that rewards kill intrinsic motivation, replacing it with extrinsic motivation. When the reward stops, the rewarded behaviors stop, too. If a child likes to draw, for example, rewarding them for drawing will damage their relationship with drawing. The message of rewards is - the thing you’re doing is not worth it unless you get the reward. Praise, conditional approval, attention, otherwise withheld access to activities, are all rewards. Lastly, rewards are also punishments - because withholding a reward is punishment. Punishments and rewards establish a transactional relationship and reduce intimacy, connection and trust. They are all a tool for control. I recommend Alfie Kohn’s Punished by Rewards for a deep dive with a lot of citations showcasing some fascinating studies.
  • ambrotos 5y ago
    Another possibility here is to expose them to the idea of bills too. As a kid, my account balance was easy to manage because it only went down when I swiped my card. Auto paying bills forces you to always keep a healthy account balance. When they are old enough to understand, make sure to tell them about financial tools besides checking accounts. Explaining how they work, and what they should be used for could go a long way.
  • dr_orpheus 5y ago
    > we tried allowances before then but dropped it because it was tied to doing work around the house which we felt they should do anyway Glad you mentioned this one too because this is something I was thinking about too. We tried to strike a balance where the kids don't have a regular allowance for normal around the house chores, but pay them for "projects" that are sort of above and beyond the normal course of chores. This would be things like helping put in a new flower bed, or re-arranging the living room.
• eterps 5y ago
  IMO https://www.google.com/search?q=cashflow+game https://www.google.com/search?q=cashflow+game works really well for that
• schnevets 5y ago
  I grew up when cash was more essential, and my mom would use my piggy bank as an ATM. If there were a situation where she needed a dollar (or a twenty), she would let me know and then pry into my jar full of cash. If she did so, she knew to pay back an extra dollar down the line. Part of it was her convenience, but it taught me about growing my money. As long as I had some cash available, there was a possibility that it would accumulate interest.
  • xtracto 5y ago
    > there was a possibility that it would accumulate interest This is something I wish my parents had put more weight in me learning. They of course taught me the value of money and I had to pay for the things I wanted to get. However, even though they gave me an allowance and extra money for each A+ I got in school, they never taught me about the value of saving money. I always think back to when I started working in my 20s and wish I had saved religiously 10% to 20% of my income. Through all my life I have been able to do it, but just didn't see the benefit of saving that and investing it somewhere (even if just to get 6% interest).
• Mikeb85 5y ago
  What are good money habits? Inflation eats savings and debt is incredibly cheap at the moment. Being 'good' with money basically keeps you at the exact same socioeconomic level but risk-taking and entrepreneurship generally correlate with social mobility. Anyhow, IMO, make them do chores for an 'allowance'. Teach them that work = making money. As they get older you should instil in them that making more money is far superior to all the saving in the world, especially at a young age. Education and risk-taking in your 20's is far superior to trying to save for retirement from 20 years old.
  • ido 5y ago
    Education and risk-taking in your 20's is far superior to trying to save for retirement from 20 years old. Education, yes...Risk taking? That depends on how the risk turns out ;) I'm 38 and have been an entrepreneur several times (currently managing a small startup of 5 employees). I would have been at a much better situation financially if I decided at age 20 to optimize for getting hired at a FAANG-type company and going up the ranks while saving a good portion of my salary. And that would have had a small fraction of the risk of starting my own company.
    • frankbreetz 5y ago
      sounds like you should have given up risk takeing toward the end of your 20s
      • ido 5y ago
        I like where I ended up! But it was not the financially optimal outcome.
    • Mikeb85 5y ago
      Risk can take many forms. Going to college at all can be considered a risk versus going into a trade depending on your socioeconomic status.
      • ido 5y ago
• muffinman26 5y ago
  One strategy that my parents used (accidentally, I think they would be appalled to remember it) was to only pay me an allowance for seasonal chores, specifically mowing the lawn in the spring/fall. That meant if I wanted to buy Christmas presents for my friends in the winter, I had to save my money from the fall. This taught me to not count on a good income continuing forever. As I got older, they also occasionally asked me to pay for small necessities myself, which taught me to save for unexpected expenses. They also made a game out of calculating the tip together, so I saw exactly how much money it cost every time we ate out. To this day, I still eat out rarely and never order soft drinks at restaurants because it's such a clear waste of money. It may seem like a trivial amount of money, but I had plenty of peers in tech who paid $20+ a day to eat out every meal. It adds up quickly. There are also some very practical lessons, like exactly how to write a check, enter an entry in a checkbook, or pay for gas at the gas station, which my parents made sure I saw them do and explained each step, as well as the standard cautionary tales about how credit/interest works and the importance of paying bills before they accrue interest.
• deleted 5y ago
  [deleted]
• AdamN 5y ago
  First, read "Debt: The First 5,000 Years" by David Graeber so you understand money better in the first place.
• baron816 5y ago
  I think it would be great if you could use screen time as a proxy for money. Give kids a screen time allowance, but let them earn interest on unused screen time. Let them do chores for extra time. Let them trade it with their siblings/friends. Kids don’t have that much use for money, and some families can’t afford to hand over any cash to them. Screen time on the other hand can be unlimited, but it something you do want to limit, and can be a useful tool for teaching delayed gratification.
  • bserge 5y ago
    Give them an allowance, wage for various tasks and make them pay for screen time with actual money.
• brg 5y ago
  You'll see a lot of advice, and my suggestion is to try a bit of everything until you start to see the right framework for your family. Whether this is allowance, family contribution, piece-work, incentives, etc really depends on how your family operates. One thing that I believe my kids has responded well to is the re-assurnace that when they have earned money it is theirs to do with as they wish. It won't be confiscated for punishment, and we don't force our children to make specific purchases. Further while both parents will often advise on purchases, we don't stand in the way of kids making bad decisions (quality, quantity, utility, etc).
  • jonshariat 5y ago
    Thats a great point about actually respecting that its theirs and letting them make mistakes. This is also the most common leadership mistake I see. You have a talented leader who can't grow past a certain point because they can't let others make mistakes in order to grow and lead themselves.
• bradser 5y ago
  A friend of mine founded a financial education startup focusing on participatory budgeting for schools and families, might be a fun thing to try out: https://firstroot.co/solutions/families/ https://firstroot.co/solutions/families/.
• seafoam 5y ago
  Forestry management.
• 8589934591 5y ago
  These are things I was taught when I grew up, which I think I'll also follow when I raise my children. 0. Save first. Spend the rest. 1. No money / allowances for doing chores. Chores are part of your life in your household. 2. Maintain a piggy bank or a notebook to note down what you have received and put it in savings. This would be the start of your wealth. My parents didn't adjust this amount to account for inflation, but I plan to do this for my children. They also kept the money in their bank account, but I kept track of the money in my notebook. 3. Maintain a notebook showcasing income/expense wrt your piggy bank. 4. After a certain age, sit with your child and explain the monthly expenses and investments and why they constitute a % of the total income/expense. Additionally teach them about investments and insurance. 5. Explain why certain things are outside of your capability to buy stuff. This would enable them to understand that not everything is affordable.