Money Matters

My wonderful friend and blog reader, Tina, emailed me a suggestion for something to do with the kids this week based on an article that she read on MSNBC.  The article is titled ‘Moms, teach your daughters about money too’ and is about a recently widowed woman who realizes that she, and hence her kids, don’t have the understanding that they need to manage the family finances when her husband passes away.

http://today.msnbc.msn.com/id/39689446/ns/today-money/

Now, I am probably the last person you should ask about financial matters.  When I first graduated from undergrad and was starting my first real job, I got some advice from a coworker with who was close to retirement that has been my investment strategy ever since:

“If you don’t know what you’re doing with your money, every time an opportunity comes by that doesn’t seem too risky, if you can afford it, put any extra money you have in it.  That way, when you figure out how to invest well, you’ll have some things to start with and too much time won’t have been lost.”

So that’s what I did, and although I realize that it sounds like the stupidest financial advice ever, it’s a big part of how I can afford to stay home with my kids now (a much bigger part, of course, being my husband’s job).  When a form to divert some money from my paycheck into bonds came to my inbox, I clicked on it and put a small bit in.  When paperwork about joining the shareholders investment plan can into my inter-office mail, I signed up, and incidentally the stock has split twice since I started that…and without really knowing too much of what that meant at the time, I saw my shares grow.  When a friend recommended a financial advisor that she was using, I went to his free personal assessment meeting and followed his advice.  Ok so enough examples of what’s in my portfolio, I don’t want to make it too easy for someone to come rob me J but suffice it to say that I wholeheartedly agree with his simplistic advice.  If you don’t know what you’re doing, just keeping saving and investing in things that make sense.  That being said, I want my kids to be better with their money than I am with mine, and as they say “Those who can do.  Those who cannot teach.” 

So how do you teach toddlers about money?  My kids already know that money comes in bills, coins, and cards and that you give someone one of those things and they give you something in return.  They practice the concept often with a toy scanner they have.  Briana also loves getting gift cards, which she thinks are credit cards, because she loves going to a store and paying for something new with them all by herself.  We’ve also talked a lot this summer about how a lemonade stand works to make money because some kids down the street were quite diligent about theirs this summer.  I remember my brother and friends and I working so hard at our little lemonade stand in the front yard as kids, so I ALWAYS stop and buy a cup and give a big tip.

After a lot of online research on teaching toddlers about money (of which there is very little info incidentally), I decided to focus this week on teaching the kids what saving money meant since we’ve really only talked about acquiring and spending it and I’m trying to avoid raising little Gordon Geckos.  So I started at the obvious place, I called my bank and asked what they thought I should do to teach the kids about savings.   I wanted to know if they thought that it was really early to start an account for the kids.  Fortunately, and surprisingly, my bank actually has a toddler savings account program which works a little like a trust in that money can come in, but they can’t take any out until they are 18.  Who knew?! 

So I decided to take the kids to the bank to start a toddler savings account, but I wanted to do a little pre-work to avoid a Mary Poppins-esque investing fiasco.

“When you deposit tuppence in a bank account

Soon you'll see

That it blooms into credit of a generous amount

Semianually

And you'll achieve that sense of stature

As your influence expands

To the high financial strata

That established credit now commands”

Don’t know if I’ve mentioned this before, but Mary Poppins is my all time favorite movie.  So I can’t stop myself from singing the lyrics above to the kids for the whole drive to the bank and back…and a couple days prior and probably for days afterwards in all honesty.

So before we left for the bank, I wanted to explain what types of money there are and the many ways to save it first.  I started with the piggy banks that the kids have in their rooms.  The kids are used to seeing the piggy banks and we’ve talked about how heavy they are when we were looking for things around the house that were light and heavy.  The girls were startled to find out that they were actually full of money.  Hopefully they’ll forget how to take the money out.  In retrospect I wish I hadn’t shown them that.  The piggy banks were gifts from their grandmother (my mother-in-law) and from a good friend, and were already full.  Both kids had a lot of fun putting coins we had around the house in.  Bree asked why we have a bank in the house and outside.  I told her that it was the best idea to try to have your money in lots of different places.  I skipped telling her why we put money in different places to avoid a discussion (that honestly I have a limited understanding of myself) about failed investments, runs on the bank, and other such negative things.

I wanted to also explain the types of money in more detail so I made this spreadsheet in Powerpoint the night before:

We talked about each square and what goes in it.  We also talked about what you can buy the most stuff with and what you can buy the least stuff with.  Then I tried to give examples of what each thing could buy.  Of course I have no idea where you can actually get a piece of candy for a penny, but saying you can’t buy anything with just a penny seemed kind-of sad, and we need a bit more math to explain change.  Then I got out a each of the items, a penny, a nickel, a dime, a quarter, and a $1, $5, $10, and $20 and we matched the real items and put them in the correct square on the printout.  A fun and enlightening activity I think although it was overshadowed quite a bit by my back of mind thought “Please, Abby, don’t swallow any of the coins!”

Abby was quite the star of this activity!  She really impressed me I must say.  She got to listen to the lesson I was telling Bree about everything, but then she got an extra lesson just for her.  I showed her the coins and said “Abby these are cents.”  Abby repeated, “cennns”.  Close enough.  Then I showed her the bills and said “Abby these are dollars.” Abby repeated, “dolla”.  Great!  Then when it came time for Abby to sort her money, I held up each one and Abby correctly said “cenns” or “dolla”.  I couldn’t believe it and I tend to have high expectations of my kids!  She truly got it right 90% of the time!  Briana and I both clapped for Abby and she gave a big smile.

Lastly, we all talked about what was on the coins.  The words and pictures intrigued the kids.  Bree thinks the dime is “all wrong!”  Apparently all of the other coins are in size order from least to most valuable except the dime, which is too little.  Another fact that Briana alerted me to that I had never noticed before is that all of the money, bills and coins alike, have a face on the front and a building on the back.  Except the dime, which has flowers on the back.  “That silly old dime is just all wrong!”   

Then we gathered up the money in Briana’s wallet and put the wallet into her purse and headed to the bank.  The night before my husband and I talked and decided that we wanted Abigail to get her account when she really knew what it was, so today we’re getting Briana her big-girl-3-year-old bank account.  Abby will have to wait until she’s 3 to get her own.  Amusingly, the fact that it was such a big girl thing to get made getting her own bank account much more special to Bree, and hopefully will do the same for Abby in a year and a half. 

Bree was hilarious at the bank.  She walked in and announced really loudly “Somebody needs to get me a savings account please.  I have lots of monies in my wallet in my purse to put in it.”  Ah!  Only Briana could make a scene in the middle of a bank full of people.   I explained that we never tell people that we have money in our purses.  We sat down with the banker and Briana told him her name, and her birthday, and answered every other question he asked.  It has been quite a proud day for me!   She signed her own name (kind-of) on a separate sheet of paper (the banker was used to 3 year olds for this account so I got the real form to write her name legibly on).  He explained to her what the account was and that she was going to have more and more money in her account because of the interest.  We got her packet and I thought we’d leave.  Briana told the banker that she didn’t want to leave the bank.  She liked it and was going to stay with him.  He tried to tell her that she can’t stay in the bank and she asked him what he was going to do.  He walked into a trap without even seeing it coming.  He answered that he would sit with her money and take care of it.  She was delighted to tell him that she could sit with her own money and watch it grow big and strong by herself.  She is three now after all.  At least she chose logic over tantrum.  She sat down to watch her money and discovered that it doesn’t grow very fast at which point she was content to leave and come back another day to check on it.  Abby for her part was mostly quiet and content to play with the key chain she got.

After we left the bank with our card and packet in hand, we go to use a different type of card – a credit card – at Book Bums for a playdate.  Nothing is worth more than time with friends after all.

Thanks for the idea, Tina!!  If anyone else has an idea for something you’d like to see me research, teach my kids, and blog about it, please let me know!

<3 Pedigreed Housewife