Teach kids to become money masters

Teach kids to become money masters. When Sunny Lee’s identical twin boys, Jason and Matthew, were 2 years old, she began teaching them about money by working up to the concept. “If I was folding laundry or sweeping the floor, I would say, ‘Mommy needs your help,’” says Lee, author of Is Your Child a Money Master or Money Monster? Each tiny contribution was followed by an enthusiastic, “That was so helpful! Thank you so much!” and a hug. Starting in kindergarten, the boys began earning a weekly $3 “commission” for not only doing these sorts of household chores, but for reading books they checked out from the local library and writing a short book report. Lee created a reward chart she initialed when the boys finished their projects. “To earn their commission, they had not only had to complete their tasks, but do them with a good attitude,” says Lee. At age 7, each son opened a checking account at a bank they chose so they could see where their money was growing safely, and a few years later, a 529 college fund and a Roth retirement IRA at a brokerage firm so they could learn how to invest their earnings. By the third grade, the boys had each finished more than 200 book reports. Their third-grade teacher gave them full credit for the reading she required in class. But the boys wanted to participate anyway because they liked to read!

As time went on, Lee and her husband, Thomas, began upping the ante, incentivizing each boy for good grades as well. Every A grade they earned in a subject netted them $5. All As on their semester report card netted them a bonus of $120. Over time, their earnings began to mount. Now, at 15, both sons have more than $10,000 in each of their college funds. “They both want to become doctors,” Lee says. They have their college picked out and have already taken a tour. “They understand that they will pay for their college, not their parents,” Lee says.

Lee’s passion for teaching her boys about money through a system of reminders, routines and rewards grew from her own experience with poverty. Growing up in Suncheon, a scenic agricultural and industrial city in South Korea, Lee saw her factory-worker parents struggle financially. Inspired by their work ethic, however, Lee asked her mother for a job. At 7, Lee began to clean the house after school. Her mother helped her open a personal bank account to deposit her earnings. Lee dreamed about becoming a millionaire. Years later, however, when Lee estimated her savings to be around 1 million Won in Korean currency ($1,000 US dollars), she went to deposit more money but discovered that her bank account was bare. Desperate to pay the bills, her mother had taken Lee’s savings without telling her. “It was devastating,” Lee says.

The experience fueled Lee’s resolve to become a professional investment advisor and help her boys become master masters. “From the beginning, it was important to me that my sons understand financial security and build the confidence to know they’re in charge of their money and their life, even if they work for someone else,” she says.

From getting the “gimmes” in retail stores to saving for college, money is tough parenting stuff. But if we teach kids how to ride a bicycle and learn to play well with others, money should be in the mix too. In addition to paying kids a “commission” to complete weekly tasks with a positive attitude, Lee offers these 6 money habits she developed to help her sons learn to thrive financially that you may find invaluable, too. 

  • Talk about money. From an early age, Jason and Matthew began hearing positive messages about money Lee repeated whenever she felt it was appropriate, such as “Money is a vehicle to make our lives comfortable and enjoyable” and “money is meant to be shared.” “Positive messages toward money are fundamental to helping children develop the good habits that will help them learn to manage their money well,” Lee says. It’s never too early to start talking about money. “Even 2 year olds can begin to understand,” she says.
  • Start saving early. When you’re shopping and your kids ask you to buy them things, don’t give in. Instead, encourage them to create their own spending power by thinking about what they could do to buy that for themselves; suggest age-appropriate chores around the house, such as folding laundry and watering the plants. “Even 2 and 3 year olds can water a plant or fold their own socks,” Lee says. The results may not be perfect, but if done to the best of their ability and with a positive attitude, that’s good enough.
  • When you pay your kids for their chores, tell them: “This money is like a seed. If you plant it now and take great care of it, it will grow into a big tree in your future. You can do it because you’re a money master!” Lee says. “Your children will begin to think of themselves and their money in a positive way, which is the first building block of success.”
  • Make results visible. For young children, a small transparent piggy bank that can fill up fast is an important teaching tool. “The success of seeing their money increase will inspire them to keep going,” Lee says. When the piggy bank is full, take a trip to the bank; have your child deposit his earnings into his own bank account, with a reward for the deposit, such as enjoying the bank’s free hot chocolate. “Every time we came back from the bank, Jason and Matthew were eager to earn extra money by doing more chores around the house,” Lee says.
  • Share your shopping strategies. When you’re shopping with your kids, talk about your savings strategies. Do you use coupons or money-saving apps at the supermarket? Why are you shopping at Marshall’s rather than Nordstrom (or vice versa), or using that Groupon in a restaurant? Are you taking the kids to an orthodontist in a distant town because it’s 50 percent less? Don’t keep your saving strategies to yourself. Kids learn to be smart spenders by soaking up your real-world examples, Lee says.
  • Play money games. Learning about personal finance should be fun, so encourage your kids to play money-related interactive online video games. PracticalMoneySkills.com is a site Lee recommends, especially for its games for all ages, including Cash Puzzler, Financial Football, Financial Soccer, Money Metropolis, Road Trip to Savings, Peter’s Pig Money Counter and Countdown to Retirement.
  • Celebrate successes. Every Saturday, after Jason and Matthew completed their weekly tasks, Lee would present each boy with their $3 earnings. If they did anything extra, such as taking out the trash, she would give them an extra dollar as a bonus. “Every time I handed the money to one of them, the rest of the family clapped, wore big smiles and said, ‘Great job! You did it!’” Celebrating another person’s accomplishment teaches us to be generous,” Lee says. It’s motivating too. “Children need to know their works are appreciated and that their parents are proud of them.”

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