Apr 9, 2012

Sunglasses & Money

Check out these shades!  Personally, I would never wear them but when she has them on, I'm in love.  Yep, she looks cute but these sunglasses represent a great change that I'm witnessing with this girl.  It's one I'm very happy about.  It has to do with money and the hard lessons on teaching kids to budget.  Ugh!  Right?!  You may have been there, or are going through it with your own kids.  Here's my story and how we initiated change.

I'm not sure about you but teaching our kids how to wisely use money has been a big challenge.  My older daughter, now that she babysits and has her own cash flow, gets it.  She's been able to do amazing things with her hard earned cash.  She saves, she's patient, she thinks before she spends.  She gets it.  My twins, they are 10, and well, money and budgets just haven't been something they understand or was even interested in.

I think for them, having money was like holding a hot potato, they just want to get rid of it fast.  Do you have a kid like that?

As parents, we knew we had to work with them on this problem so last September we started giving our kids a small pay day every month.  We were so tired of them asking for things they didn't need in the store.  Asking might not be the best word - begging, is better.  We finally decided that we'd give them money once a month and they had to budget it.  If they wanted something they had to buy it themselves and if they blew all their money before the next pay day, well, they were out of luck.  There would be no borrowing or lending.  No debts to be repaid.  Harsh?  Maybe.

From September to the end of December, we had no rules on their spending.  We'll, except one, they had to pay tithing.  We pay a tithe to our church.  We'd also advise them on spending choices but ultimately the decision was theirs.  Without fail, all their money was spent almost as soon as they got it.  They'd make lofty statements, "I'm saving for ______".  But, being in a store, and the lure of having something right then, always over ruled their best intentions.

When the new year started, we had a family home evening on finances.  I personally think it's a good idea to get kids involved in family finances, to some extent of course.  So, I totaled up all the money we spent from September to December at our 4 most visited stores.  Sam's Club, Walmart, Target and of course, Hobby Lobby.  The numbers were quite shocking.  We talked about what we bought with that money.  Most of it was food, clothing, household needs and of course craft supplies.  Then, I asked them to tell me where they spent their money from the last 4 months and what they had to show for it.  My older daughter knew exactly but the twins, neither of them could answer.

Q: "Where did your money go?"
A:  "I don't know."

Q: "Can you go get me something you bought with it?"
A:  They couldn't remember

I knew where it went, cheap toys and candy.  Instant gratification isn't so gratifying when you look back and realize your error. This sent one of them into tears.  She cried and felt so bad that she'd wasted all her money.  It's hard to see your kid hurting but I knew it was a lesson that she needed to have.  Plus, we had a solution that would help her, and her sister, be great at keeping track of their spending and hopefully, help them to be wiser with their money too.

We then introduced them to a very simple ledger.  Basically it was my own created version of a check register. It was just a half sheet of paper with columns and rows where they could track their spending.  Keep a record of how much money they had on hand and it provided a place to list their purchases.  When I ask them, "hey what did you spend your money on?", they will now know.


We told them there were three rules they needed to follow:

1- they had to set aside 10% for tithing
2- they had to set aside a minimum of 10% for savings (they could do more if they wanted)
3- they had to save receipts and record everything they spent.

We showed them how the ledger worked and we hit the new year running with a great goal to help them be better with their money.

I will admit I was expecting immediate results.  I naively thought this was just the ticket that would help them give up their need to buy junk.  It wasn't, at least not right away.  You can see from the photo above that one of them recorded her purchases of a soft drinks and fake nails.  It was so hard for me to sit back and let her spend.  While the results weren't as quick as I had hoped, one of them caught on pretty quickly.  With in a month she was making better choices, she was choosing to put more into savings, spending less and when she did purchase something, it was usually something useful that would last a long time, like clothes - buying her own clothes is like saying she's growing up and is independent.  She loved that.  She also realized buying a sweater lasts a lot longer than a bag of candy.

So, moving on to the sunglasses.  Bug, she's a great kid but it took her longer for the light bulb to go off.  However, last week, it happened.  It was that magical moment as a parent that you see the results of your hard work in your kid's actions.  She wanted to go shopping.  Just to be honest here, I really dread shopping with my younger girls so I wasn't looking forward to it but I did take her.

Much to my surprise she actually shopped with purpose, had her ledger on hand, compared prices and even - get this - quality.  She compared the quality of different products.  I was floored.  I didn't have to give advice or try to sway her.  She wanted glasses, shopped for a good pair, compared everything from style to color to price.  She found this pair at Charlie Girl for $6.99.  She found another pair at Claire's that was similar for $12.99.  She determined the sunglasses at Charlie Girl were not only a better deal but also better quality.

It was Awesome!

After purchasing the sunglasses she also stopped shopping.  She still had money but she didn't want to spend it.  I about shouted a giant "Hallelujah!" right there in the store.  It clicked.  She hit that milestone in her maturity, one that we'd been hoping for since last September.  I'm sure she won't always be a sensible spender but it's a start.  Plus, she purchased something she loves, those sunglasses - they go every where with her.  I'm sure she will get a lot of use out of them.  Not bad for a $7 purchase!

And on a side note, just to keep things real.  Right when I was just about to pat myself on the back for my mad parenting skills, I was humbled.  Two days after showing wisdom with her money, she took a razor and shaved one of her eyebrows off - yaaaaa, it was a great moment in our house!