336 | How We’re Teaching Our Kids About Money

Do you want to talk to your kids about money but don’t know how?

With so much information out there, how do you know where to start?

In this episode, let’s talk about the money conversations my husband and I are having with our kids and the skills we’re teaching them to start developing good habits now.

• • how our kids earn money

  • the accounts we’ve opened for them

  • how we invest for our kids and which companies they’ve chosen to invest in

  • 3 things we teach them to do with their money

  • real money conversations we have with our kids

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You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back.

Today, we are talking about the ways that my husband and I are teaching our kids about money. Let me preface this by saying that this is not an exhaustive list of all the things that you can do, or probably even that we’re doing, and it’s definitely not expert advice. This is exactly what you should do to teach your kids about money.

We are still learning. We are still figuring things out, but we wanted to start exposing our kids to money and teaching them about the value of money and how to manage their money and the things that money can do for them.

So we’ve started doing some of these things. And if you like them, please feel free to take some of them and try them with your own family. If you have ideas of things that you’re doing that we aren’t doing, I would love to hear them. So please feel free to email me. I’m at hello at Rho thomas.com. But let’s get into the things that we’re doing, or some of the things that we’re doing to teach our kids about money.

Number one, we give them opportunities to earn money. Our kids are 10 and seven, so they’re not at the age where they have full-time jobs, or I guess no kids have full-time jobs. They’re not at the age where they’re working in an official capacity, but we give them opportunities to earn money.

For example, if they do things around the house beyond the normal things to keep up the house, they can earn money for that. We don’t pay for cleaning your room or washing dishes or taking out the garbage. But if they shred papers for me, they can earn money. Or one of my kids has one of those handheld vacuums, and he loves vacuuming, and so I will allow him to vacuum out the car, and he can earn some money for that.

We also tried something new this summer. We got these activity books that are designed to keep up your skills from one grade to the next over the summer break. And we told them that they didn’t have to do them because it wasn’t an assignment or something like that that they had to do for school. This is extra, and because it’s not part of the things that they have to do, they can earn money for it.

So we told them we would pay them for each activity that they did in the book, and each activity might have been a page or two, and we put limits on it so they could only earn up to $10 a week. But they did a lot of those activities, and so there was a dual benefit because they are keeping their skills fresh, but then they’re also earning money on a more regular basis.

I had them keep a tracker to show how many activities they had done each day, and the total that they earned for those activities, and they had to turn it into me at the end of the week to get paid, so that’s teaching them about keeping track of their time and making sure that they are getting the money that they’ve earned and that kind of thing.

The second thing that we’ve done is we opened bank accounts for them. We started with savings accounts, and we just wanted to put a portion of money that they were getting for birthdays and holidays and things like that in them. But we wanted them to have the experience of managing their money.

This actually came before the opportunity to earn money regularly this summer. We opened the checking accounts for them, and so when they earn money, that’s how they get paid. We transfer the money into their checking account. And to be completely transparent, because they are only 10 and 7, the checking accounts are actually in our names, but I just put those little bottle labels on the debit card for the different accounts, so one debit card for one child, one debit card for the other that has their name on it, and so they are able to manage their account despite that it’s not technically in their name because they’re too young.

So we have those accounts. We’ve got the savings accounts that I mentioned, and then we also opened investment accounts for them. Now, the checking and savings accounts are fully funded by them, so it’s their earnings for those tasks that I was talking about, gifts, and you know however much they decide to save. The investment accounts we actually put money in for them every month, but then they also contribute some of their own money.

For example, one of my kids learned a few months ago that Microsoft owns Minecraft, and so he decided that he wanted to buy Microsoft stock, and he put $8 into it, and he owns .01 of a share of Microsoft.

The majority of the money in those investment accounts is in the S&P 500, which is not investment advice. I am just telling you what we do. So I don’t mind them owning fractional shares of Microsoft, or my other kid bought Coca-Cola, and he’s got some fractional share of Coca-Cola. I don’t mind them owning these shares of individual companies that they’re interested in because the majority of the account is in a more balanced fund.

So that’s teaching them about investing, and then we will look at the accounts with them, and they’re learning about interests and seeing how the accounts go up and down and all of that. So that’s been really fun to teach them about how they’re managing their money with their checking and their savings and that kind of thing, which leads into my next point that we teach them how to handle their money.

When they get money, whether it’s money that they’ve earned or it’s a birthday gift or whatever it is, we’ve taught them not to spend it all. They tithe, meaning they give 10% to our church. They save and invest a percentage, usually about 20% total. But they decide the breakdown of how much they want to save versus how much they want to invest. And then they have the rest available to spend.

And the goal there is to instill good habits early. Now, I will admit we have run into mistakes with this. They have overdrafted their accounts before, and they have had those times where they’re not as mindful of what’s actually in the account and how much they have, but it’s a learning process, and I would much rather they make those mistakes now and learn now rather than them going forward and doing it for the first time as adults.

All right, another thing is we talk about what things cost. So my kids know how much the mortgage is. They know generally what bills cost. They know about how much groceries cost. We talk about when we get takeout or we go out to eat how much that costs. We talk about how much vacations cost.

We talk to them about these things because we want them to have a realistic perspective on how much life costs. We don’t talk about it every day. But again, when they come up, we are pretty open about those things so that they have a realistic viewpoint of money and how much things cost.

All right, and the final thing that I want to share is we explain our reasoning behind our financial decisions. This is not every single decision that we make, but a great example is that one of the boys asked if we could start getting Chick Fil A before school because some of his classmates come to school with Chick Fil A every day, and we walked through the math of what that looks like. When we go to Chick Fil A, it’s typically like $20. As an example, if we do that every day, that’s $100 a week for the school week. If we do $100 a week times, call it 40 weeks that kids are in school, that’s $4,000.

That is a vacation. So we could have Chick Fil A every day, but then that means that maybe we don’t take one of our vacations. Just explaining that decision. Like we don’t do that every day. We don’t get takeout or go to restaurants every single day because when we spend that money in those places, then it’s money that we would have to pull from something else.

We’ve also talked about our decision to buy the house that we bought. I think I’ve shared here before that we bought a house significantly less than what the bank said that we qualified for. And that initial decision wasn’t so much about the financial strategy piece and all of that. It was just us thinking about what we could realistically afford and also still be able to live our lives. But we’ve talked about the fact that because we bought the way that we did, we have been left with a lot of disposable income over the years, which allowed us to pay off our debt so quickly. It allowed us to build wealth. It has allowed us to live a very comfortable life and make some of the decisions that we’ve made.

The hope is that in having these conversations, in explaining the reasoning behind making a decision like not going to Chick Fil A every day or buying a house that maybe isn’t as big or as fancy, they can understand those decisions, and hopefully it will guide them when it’s their turn to make these kinds of decisions. And again, it’s not a conversation that we’re having every single day, but when the topics come up, we talk with them openly about them.

So those are a few of the things that we’re doing to teach our kids about money. Again, it’s not an exhaustive list. I’m not saying that you should be doing these things, but I’m sharing what we’re doing in case it’s helpful for you.

If you would like some guidance on getting your own finances in line so that you can have those types of conversations with your kids and pass those same types of lessons on, you can apply for a coaching session at Rho thomas.com/apply, and I’d be happy to help.

All right, so that is it for this week’s episode. Please take a second, share this episode with a friend or two who you think could use this information. That is how we get it in the hands of more lawyers. And as always, I appreciate your support.

As we close out, friend, I pray that you take the information you learn here, apply it in your life, and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.