Technology & Teaching Kids About Money

By: David Smyth, August 18, 2017

With all the kids going back to school this week, we're all thinking about everything they're going to learn this year. Exciting stuff! But don't forget to keep teaching and talking to your kids at home about money, budgeting, and other basic financial topics. 
 
At my house, we've been using an app called Our Bank, which allows me to set up an "account" for each of my three boys, and keep track of their spending and earning. It's not something the boys access themselves. Rather, they have to come to me to talk about how much they have, and discuss what they want to buy that's beyond what Dad would normally pay for. 
 
Now, my 4-year-old talks to me more than I want him to. But my 9- and 12-year-olds don't talk to me often enough! All you parents out there know what I'm talking about, right? The great thing about this app is that it allows me to not worry about what my boys are buying because I know they'll talk to me first. It creates conversation. Gates, Ridley and Michael are too young to talk about things like car insurance or groceries or rent, but they will talk to me about the cost of apps, video games, stuffed animals or fancy sneakers. 
 
They've learned that even the free apps eventually cost money if you want more tokens to keep playing! And, I'm proud to say my boys have also used their money to give to humanitarian efforts at school, and buy presents for their brothers. My goal is to have these conversations from their current experience and perspective, not from what I eventually want them to know about giving and generosity. 
 
Of course, mostly they buy things they want, and I've offered a 50/50 match for anything over $100 that they're saving up for. But I can tell you that, in the five years since I made that offer, it's been used exactly one time - on an Xbox. It's funny how often they say they really want something, but a couple days later I get a request for an app, or candy at the movie theater. Then, when one of the boys doesn't have any money, we'll talk about where it went. I'll ask them if they feel good about their purchases, and what they learned. It's always interesting to hear their responses and perspective. 
 
Ridley, my 9-year-old, doesn't spend money as often Gates, my eldest. He likes high-quality stuffed animals and other 9-year-old things. Although he did buy a $64 dinosaur for his brother - he'd really like it! - he told me. Ridley also recently signed up for a $9.99 per month Xbox pass. Now some parents may say I should just pay for this stuff, and I admit I am paying for it through giving them an allowance or compensating them for chores. But this way, they get to think and decide how they want to spend their money, instead of simply expecting Dad to pay. 
 
And folks, I'm totally fine with a 9-year-old spending it all and having no money. Anyone out there who's ever gone to a Wal Mart or Meijer with 9-year-old knows it's a lot easier if said kid is out of money. :) 
 
It's amazing to see how my boys change when they do really want something. They'll go from video-gaming, playing with action figures and watching TV to offering to watch their little brother, sweep the garage, clean the deck or pull weeds - all to earn a few extra bucks. And I'm happy to pay them for their efforts. In working with 60 to 100-year-olds-in my business, I see that, by this time, people have either figured out how to be frugal and live within their means, or they've figured out that being frugal really isn't part of their personality, and they've changed to a profession that would allow them to print money as needed. The ones that didn't figure this out, well, we typically don't see these folks because they have nothing. 
 
There's nothing wrong with spending money for things you want. The issues arise when you're spending money faster than you're taking it in. And after 20 years in this business, I truly believe that all of us are hard-wired at birth to fall somewhere between frugal and spendthrift. This could be due to personality type, and sometimes these tendencies are exacerbated one way or the other by life events growing up - whether you experienced poverty, or you had a parent who saved and saved, only to die young and not get to enjoy any of that effort. 
 
Believe me, I've heard every version of this story in my two decades in the financial planning business. The only thing I care about as a financial planner is, when you get that paycheck, that you're saving some, you're giving some to your community or a cause you care about, and spending the rest on the lifestyle you choose. It's no different than how we balance the macronutrients in our diets - protein, fat and carbohydrates. The key is to have balance between saving, giving and spending. Everyone will go through periods of emphasis on certain areas. That's normal life. It's not right or wrong, it just is what it is. 
 
But to circle back to my kids - my focus as a parent isn't on teaching them to be frugal or a spendthrift. My focus is on teaching them to identify their spending - are they saving up for something beyond their daily needs (daily needs like candy Ale 8 and Mountain Dew!), are they doing something for the greater good, are they spending in a random way, or are they saving and spending on things they truly want?
 
It's interesting to note that, on a beach trip earlier this summer, all three boys bought shark-tooth necklaces, but only one is still being worn. They all three bought stuffed animals, but only two are still in use. One of my boys spends the majority of his money on apps and software and computer add-ons, but he's also the one who has the name picked out for the video game company he plans to start someday. He's also the reason a portion of our portfolio is in Electronic Arts, which has gone from $11 in 2012 to about $117 per share currently! So yeah, he's wasting his money on apps and software, and he may never own the company, but you can thank Gates next time you see him for that stock pick! (And he doesn't even know he picked it.)
 
But, he and I have talked about what would have happened if he'd put $11 into that stock instead of into an app, and he's starting to think that way. And at this point, as a parent, that's all I want in a 12-year-old.
 
All you other parents out there - do you have apps or other tools that you use to teach and talk to your kids about money? Let me know so I can check it out. I'm always looking for new ways to help teach my kids about all things money. 

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