How to Teach Your Kids to Be Smart and Generous with Their Money

How can you help your kids to be thoughtful and master money? We’ll go over key things they need to know about how to save, spend, and give! 

Teaching Your Kids About Money

Teaching Your Kids About Money

In a way, I feel like 2020 has kind of given everyone a sense of how time works with parents. On one hand, you look up at the calendar and are amazed at how quickly things have flown by. 

I mean it’s already August! 

And yet on a weekly level, there’s this rhythm that somehow makes you think things are barely moving along. 

Next week our kids are back in school and we will have a 4th grader and a kindergartener. 

With this extra time together at home, we’ve had more conversations with one another. And if you’re around kids, you know that are a big part of those conversations are questions. 

Some topics we expected, our kids are 9 and 5 and they are now more aware of what’s going on, but others threw us off or at least me. 

And one of those was money. 

As you probably guessed, as a personal finance writer I do talk to my girls about money. And as a family, we have our little system for allowances, chores, and savings. 

But with the pandemic and the fallout hitting so many families so hard, our girls have asked – are we okay? They’ve wondered about others too. 

So we’ve expanded our conversations and included them in the family finances more. 

Whether there’s a pandemic ort not, I think if you ask any parent we want our kids ot not only be savvy with money, but more thoughtful and generous. 

But there can be a gap between what we like to teach our kids and actually getting started. 

Which is why we’re tackling this in two parts. Today we’re going to focus on getting the ball rolling with money talks. 

I’m excited because I’ve invited another mom in the trenches to chat  – Kristia Ludwick.

She’s not only a mom of two girls but also a half-marathon runner and the creator behind Family Balance Sheet

In this episode we’re discussing:

  • How to open up the conversations with your kids about money
  • Adjusting for each of your kid’s specific needs
  • Why your example matters 

Ready? Let’s get started!

Resources to Help Your Kid Become Savvy with Their Money

Here are some of my favorite tools, apps, and resources to get your family working as a team with money! 

Thank You to Our Partner Coastal

Support for this podcast comes from Coastal Credit Union!

Opening Up Conversations with Your Kids About Money

Elle Martinez: I want to talk about the challenges of being a parent. I mean, we’re dealing with the new day to day and figuring out, it seems like every season there’s guidelines coming and going, and, and everything’s in flux, but I wanted to talk to you about something that we.

[00:00:17] As parents want to help our kids with, which is finances, , not just telling them not to be spenders, but to really understand how finances can help them, you know, build a life that they love, hopefully, you know, help others and have that have more flexibility and you know, less stress, less stress with their lives.

And you have two, I wouldn’t say little girls. I have little girls. You have young ladies.

Kristia Ludwick: I have two daughters. They’re going into ninth and seventh grade.

Elle Martinez: Yeah. So, you know, they’re still young.

Kristia Ludwick: They have a lot to learn and there, but we started talking to them about money when they were younger and they don’t have it all together and we haven’t done things perfectly, but they’re, making their way and they’re learning and, and coming up with some of their own habits and routines.

So it’s, it’s fun to watch them evolve.

Elle Martinez: Yeah. That’s a great point that you bring that, you know, they’re learning. I think sometimes as parents, we. And we mean, well, we want to protect them or, you know, bail them out or kind of take care of everything. but at some point they have to start, you know, learning, how can I be on my own two feet and finances are a big part of that.

So you said you started talking about finances and working with them. Was there something like a moment where you and your husband said, you know, we need to talk about this with them or was it more organic?

Kristia Ludwick: I think it was more organic. I mean, I would try to think back if there was one thing that, made us start the conversation. I just think we started the conversation.

I mean, I, for a long time about family finances and I manage the finances for our family and our business. So it was just natural for me and for my husband too, to talk about money with the kids.

We’ve done a variety of different things when it came to earning money and what to do with money. And I think what the past several years, we kind of had this hybrid of how we’ve been teaching them about money management, and how they earn it and how they give and how they spend,

But, you know, honestly, with our kids, we, there was a point where I was all gung ho about tea, about money, and, you know, they have, their brains are not totally ready for the math behind it, you know?

So I think as they get older and older elementary and they, they get into higher math concepts at school, it’s gonna click a little easier. you know, how to or what percent to give and what percent to see then what percent to sit spend. And I think I might’ve started too strong, too young and then backed off.

And then as, like I said, they got older into older elementary. I think. we came up with a routine that, that has worked fairly well for them and for us.

Creating an Allowance System for Your Family

Elle Martinez: Gotcha. So do you guys do an allowance? Cause I know like every parent’s different.

Kristia Ludwick: We do, we kind of do a hybrid. I think. I mean, everybody in my family does help around the house and they don’t get paid for that.

You know, they make their bed, they do the dishwasher, set the table, things that to run the home, but I do pay them to clean the house.

My kids are a little older. They’re 12 and 14. And my 14-year-old is actually really good at cleaning the house. She’s very good at that. and she’s eager to earn money.

I know there’s some debate about this subject, but, we do pay the kids to do work around the house and I, and it’s not like they’re making Buku bucks.

They are, they are earning 10 or $20 a week. It’s not gonna make them spoiled. It’s not going to make them entitle. I think it’s a great opportunity to teach them what to do with this little bit of money that they have, you know, and it’s a good math lesson. and it’s a good. money management lesson.

So I’m very big in my kids understanding math and I think that’ll, it’s, it is a great math lesson for, for kids money management.

Elle Martinez: Yeah, we’re kind of in the same boat. So, I mean, ours are younger, eight, almost nine and a five-year-old and we kind of like you there’s certain chores or responsibility or. That you just do because you’re part of the family and this is what we need to do the pitch in.

And then, you know, we have like chores around the house, extra yard work stuff that we would love to have done, , that we will pay them, you know?

And like you, it’s not, it’s not a lot of money, but you know, for them it’s like, Oh, I –

Kristia Ludwick: –for them. It’s a lot of money. Yeah.

Elle Martinez: You kind of mentioned a couple things that you can teach with finances. Like what do you do with money? You can save it, you can spend it and you give, or you can give or share it for you.

How are you guys like helping your girls learn to become, you know, really smart with money and how to use it?

Kristia Ludwick: We have always, always when they earn money, not necessarily birthday money or gifts, maybe when they earn money, we’ve always. Taught them, 10% giving 20% savings, 70% spending. And that, that’s just an easy way to think of it. People could disagree with those percent, it’s it? You know, they’re they’re kids.

So, you know, but that, I don’t want to say I drilled it into them, but I guess I kind of did, because I’ll have to tell you a story that made me realize I killed it into them. But, that I didn’t realize until we had this conversation, but, no, they got like $10 and okay. So 10% we give.

We put in our giving folder and I have a bank book for my kids, 20% we give, we put in our savings folder and then 70% you can spend and it’s easy to break down.

They start to learn percents in school and you walk them through it. Okay. 10% of $10. So it’s a learning lesson and I, it’s just easy to kind of come up with whatever percent you want. This is what we do. And honestly, it’s very close to what my husband and I do. You know, we give her present and we save a percent we spend.

And as far as teaching them to be givers, you know, it’s important for me and my husband or for my husband and I to give. And, we, we just kind of show that we show the kids how we give. We personally, we give to our church, we give to, we, Have a child through compassion international and we give to the food bank and we, you know, so there’s things that are important to us.

But one thing we haven’t done is we haven’t told our kids where they need to give. And I think if your kids have that choice, like, okay, here’s the, am I giving money? I, I want to give to the school or they give to, one of them saw a story about. A national disaster a few years ago that, that a school and they wanted to get to that, you know, so we went through the red cross, but I think if you help kids, or if you have let kids give to things that are important to them, they’re going to be givers.

You just have to model the behavior and they’re going to let them know those choices. So that’s what we’ve done with giving and they’re both pretty generous. You know, they, they follow the 10, 20, 70, and they’re both pretty generous and eager to give, what’s important to them, so,

Elle Martinez: Yeah. I agree with you. We’ve done the same thing, like, well, to say a percentage has to be, you know, saved

Kristia Ludwick: right,

Elle Martinez: You know, a given and we kind of hands-off like what they decided to give. And I was surprised because, my oldest is really into animals, so I’ve, I was almost certain, that’s what she would give too.

And she loves to give gifts to neighbors, to friends like that is for her is more one-on-one, which I was surprised, but I. I think you’re right. Letting them have that freedom, that autonomy to make that like motivates them to give more.

Kristia Ludwick: And I, yeah, that’s, that’s a great point. Yep.

[00:08:34] Elle Martinez: [00:08:34] Okay. I kind of want to talk to you because you like me, you have two girls and they’re different personalities, even though same household. How, how do you work with that? any advice like teaching money? Are there some cases where you might have to pull one back in, in a certain area

[00:08:54] Kristia Ludwick: [00:08:54] Yeah. I mean, you really have to go work with their personality. I mean, My oldest is going into ninth grade. So she’s on a little, she’s much more mature than the daughter that’s going into seventh. And, and, and, my kids, their money was kept in a binder and that was, we called it our bank book. And so there was a folder for what they earned.

[00:09:18] There was a folder for their saving. There’s a folder for their spending and probably around seventh grade. My oldest daughter said, can I. Take the money out of my bank book and keep it in my room. And I kept it in the book and the kitchen. Cause I, I didn’t want money like all over their rooms and like just a mess.

[00:09:36] And then we would never find it. It was a good way to keep them organized. And I, but my oldest was like, can I, She loves Pinterest. So she saw some money like jars on Pinterest. So she went and got these like blue ball jars and, you know, and she made these jars. And so we let her take control of her money.

[00:09:53], she is very organized. She has. And all of this came out this week. I’ll have, you know, I was talking to my family, these questions and I known about the jar, this, I didn’t know. And she, she has a list of things that she’s saving core and how much it costs. And these are things that could range from like makeup that she wants to a car that, you know, she’s almost 15.

[00:10:15] So she’s starting to think about that, you know, so, I mean, she has all like planned out and my younger one. I feel like she will always have the book. We will always keep everything in just, and she’s a great kid, very good student, but like just doesn’t have, this is not as organized as her older sister.

[00:10:33] So those are just personality traits and you have to work with your kids and help them based on their personality. You know, now there’s an age difference and you wouldn’t think it ninth and seventh, but there definitely is an age difference. You know, a daughter that’s, you know, Just a few months shy of 15 and thinking about turning 16 and my 12 year old that he’s out plan, you know, ball and hide and seek with the neighbor kids, you know, so you have to there’s age differences and there’s personality differences.

[00:11:06] And, and my younger one will, she’ll be fine. We’ll help her along, but I think I’m going to probably be help her. I don’t wanna use the word control, but maybe just help her manage the money a little

[00:11:16] Elle Martinez: [00:11:16] A little more hands on.

[00:11:17] Kristia Ludwick: [00:11:17] yeah. Be a little more hands on.

[00:11:19] Elle Martinez: [00:11:19] Gotcha. Wow. I mean, that’s true. I think. In our minds, we were like, okay, at this stage, no, should be here, should be here. you know, whether we acknowledge it or not, but then also letting our kids, you know, their personality, how they manage money. I think the goal is to help them become comfortable.

[00:11:39] You know, and find that system that works for them that can, you know, of course take care of the essentials and the other goals. but that’s fantastic. So, I mean, they still have years, but with your oldest, like how are you kind of transitioning her to like prepare for, you mentioned, like, he’s thinking about buying a car,

[00:11:57] Kristia Ludwick: [00:11:57] yeah.

[00:11:58] Elle Martinez: [00:11:58] how does that work?

[00:11:59]Kristia Ludwick: [00:11:59] It’s funny that you are bringing this up and that we’re having this conversation because, , there’s a lot of free time this summer, so she’s like, I want to get a job. Well, not a lot of places hire 14 year olds. And, even though she’s a responsible kid, they’re just have rules. You have to be 16 most places.

[00:12:17] So she is trying to find some babysitting jobs. She’s helping me around the house. but she’s eager to work and we want to try and help her find a job. And. And find some work cause she wants to buy a car. When she turns 16. Now in her mind, she’s buying a $20,000 white Jeep, you know, that is her goal.

[00:12:36] And I, you know, you don’t want to see your kids goes down, but you know, she’s only 14 and, but that’s what she wants in her head. That’s what she is expecting. So we’re going to help her find some, find a job. I don’t know. We have some, I don’t know if you saw on Facebook, you know, she wants to babysit.

[00:12:53] So I’m trying

[00:12:53] Elle Martinez: [00:12:53] I saw that. Yeah.

[00:12:55] Kristia Ludwick: [00:12:55] post on Facebook. You know, my here’s my 14 year old for, especially now, like with parents working from home, she rate parents helper. So we’re trying to help her through that. But, she sent me a text this week and she goes, mom, everyone has a debit card. Why can’t I get one? So. She doesn’t know what it is, you know?

[00:13:16] So this is a great, this is a lesson. This is the next level and stage that we’re at with her. so we are going to the bank tomorrow and we’re going to open up a checking account and, a debit card and she has a savings account, but, you know, So that’s the next we’re at that, that level now. So, and she was just asking me earlier, cause I told her that we were going to do this tomorrow and she was like, mom, I don’t understand what happens when a debit card.

[00:13:44] And I know, I see you hand the card over, you know, what, what happens and I had, you have to explain to them, well, No, it comes right out of your checking account. So, you know, it’ll be a learning process. I’ll keep my eye on it, for sure. She’s very independent, so she’ll want to do it herself, but, you know, we’ll have to help her manage it, until she understands what a checking account is and what a debit card does though.

[00:14:12] It’s interesting. but that’s the level we’re at. That’s the next step,

[00:14:17] Elle Martinez: [00:14:17] Yeah. Yeah. And I mean, even before like the pandemic and everything, I think a lot of parents are moving away from cash. Just like you might do the allowance and everything, but

[00:14:27] Kristia Ludwick: [00:14:27] Well, you get, they get to an age where she’s going to have a paycheck and we’re going to have to put it somewhere, but I will tell you one thing, cause she asked me, how am I going to manage my. How will I know how much money I have. So I told my husband, I feel pretty strongly about this. You know, there’s all sorts of apps.

[00:14:44] She’s very ad driven. That’s kids these days, they have an app for everything. but I’m gonna make her, write it out with, in the check, the check register.

[00:14:54]And I haven’t used one in years cause we have, you know, on software, but I’m going to make her use that.

[00:15:00] Cause I feel like. After just to make it so easy and then you don’t understand the math behind it. And, and so we’re going to sit down and do it with a pencil and eraser and a calculator,

[00:15:13]or I’ve seen the math,

[00:15:14] audio_only_16778242_Elle_Martinez: [00:15:14] Yeah.

[00:15:15] Kristia Ludwick: [00:15:15] and then you can move onto an app, but you’re not ready for that when she doesn’t understand cashflow yet, you know?

[00:15:22] And

[00:15:22] Elle Martinez: [00:15:22] That’s important. And then also, I mean, it’s gotten faster with withdrawals and transfers, but there’s still always a delay. And I think when you’re really young or, you know, you’re just getting the hang of it, you can forget like, Oh, I just spent 20 bucks and it hasn’t cleared. So it’s like one of the things where you have to get them in the habit of

[00:15:42] Kristia Ludwick: [00:15:42] It’ll be a learning lesson, but we all went through it. I mean, I, so we’re going old school and whether or not we’re going old school and then I’m sure she’ll be fine. It’ll take. You know, she doesn’t have a job yet. So the money that’s going into the checking account is just money that she has right now.

[00:15:59] But, know, she’ll figure it out. It’s kind of fun to watch them learn new skills and find their way she’s. Yeah, she’s excited. So.

[00:16:07] Elle Martinez: [00:16:07] Yeah. And, and good. I mean, I love how you guys are approaching those. I mean, you have enough flexibility. Let them. Kind of in a sense like experiment and yes, like everybody, at some point feels with finances, but it’s much better at home when it’s a smaller amount than like, say they’re in college and they’ve just accrued all this credit card debt or signed up for the student loans.

[00:16:29] It’s better to, you know, do it at home where at least they got that safety net. So my last question Christina is, you know, for parents that are kind of at the stage where they. They know, they need to start talking about their kids about finances, but they haven’t yet. Do you have any suggestions on maybe like first conversations or ideas?

[00:16:51]Kristia Ludwick: [00:16:51] when I think back to when my kids were much younger, like for instance, the grocery store we’ll use as an example, it’s very easy to drop your kids off. At least our grocery store has like the, they used to before the pandemic.

[00:17:05]but I think when they get to an age where they can help, it’s really helpful for their development, from them to help with that, things like that. You know, maybe when they hit young elementary, this is our grocery list. Let’s go like groceries and then help you with things like that. You just, it’s just modeling good behavior.

[00:17:29] Cause your kids. I don’t, I don’t know. That would be my first piece of advice is just model the behavior. If you have, if you’re organized with your finances, you’re going to teach your kids to be organized with their finances. And that is like the greatest gift I think you can give your kids is to learn really strong money management, habits and routines.

[00:17:50] So, just model the behavior that you want them to. To have and include them and things like go to the grocery store and our other decisions that, you know, coupons or be an example, you know, we’re going to go to Kohl’s. We need something. We have this coupon, you just kind of model good behavior.

[00:18:09] That would be my biggest piece of advice. Just start modeling, good behavior, and slowly start giving them a little bit of money for doing some chores. and you can call it whatever you want. We call it chores and allowance. you can call it something else, but you’re not entitling your kids. You’re not, you’re, you’re teaching them money management skills and math skills, which I think is really important.

[00:18:33] Elle Martinez: [00:18:33] yeah. I love that. One, I love that idea of modeling the behavior you want to teach your kids and then to the transparency and the conversations you’re having with your girls. I think sometimes money is taboo, even like, you know, with friends, but especially, you know, talk with a family, let your kids ask those questions.

[00:18:53]you know, share your own money, mistakes you made. those are absolutely key. Let them, you know, learn from you as best they can, so they can get ready for the real world. Well, thank you, Christie. I know we’ve just scratched the surface

[00:19:07] I feel like there’s so much more.

[00:19:10] there going to be like a ton of stories, but if anyone, you know, watching listening is catching this where they can get more from you and you know what you’re doing with family and finances.

[00:19:22] Kristia Ludwick: [00:19:22] Well, I have the blog family balance sheet.org, and I write about family finances and Hill management. I share recipes and I really, hopefully I encourage families to thrive on a budget. and I’ve been doing it for many years and I just really enjoy talking about. Family finances. And you can find me@familybalancesheet.org.

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Music Credit

 Music in this episode is by artists from Audiio.

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