SERIES Teaching My Daughter About Money: Twenty Dollars

Ever since Jenn and I had our I Have Had Enough Moment with living paycheck-to-paycheck and B-R-O-K-E and living the three-time-loser-with-credit-cards life, we have made it a huge priority to teach our daughter about money management.  It became a HUGE priority when we realized that she has inherited my "spender" genes!

In this series, I will be sharing some practical ways that we are teaching her about sound money management.

Part One – Twenty Dollars

We recently embarked on the largest and longest vacation of our lives.  We traveled from South Carolina all of the way to far western South Dakota via car.  The trip consisted of a week at a fishing cabin in northern Minnesota and a week hitting all of the tourist destinations of South Dakota.

As with any type of vacation, we knew that we would be encountering the tourist traps just waiting to take money from our pockets and put it into their pockets.  This has been a source of frustration in the past because our daughter would see something she just had to have and begin a full-tilt marketing campaign to obtain it.  It starts with asking mom.  When referred by her mother to speak to dad, she spins the statement by saying, "Mom said I can get it if you say it is OK."  This spin is done to make me clearly understand that I am the bad guy if I say NO and that I am the only barrier to achieving the acquisition of said trinket/junk/trash/souvenir. 

Well, I came up with the PERFECT solution for the problem.  Jenn and I gave our daughter twenty dollars at the start of the vacation with the following rules.

  1. When it is gone, there will be no more.
  2. You can spend it however you want.
  3. We will not question your purchase, but we will answer any questions you have.
  4. You can save the money if you want.

The result?  Stress-free walks through the tourist traps.  On several occasions, I even saw her pick up an item to purchase it and then put it back down.  One time she had picked up the bag to fill up with painted rocks (painted rocks! what an idea!) and she put it down, announcing, "They are really pretty, but they would just sit around at home."

Did she save any money to bring home?  Nope.  She is a spender through and through, BUT she followed the rules and it prevented a lot of frustration. 

Here are the lessons I think are being learned or reinforced:

  • Money is limited.  If you spend it all now, there will be nothing left in the future.
  • Cash limits impulsive spending.  For spending categories that are susceptible to impulsive purchases, it is very helpful to plan ahead and take cash.  You can not overspend cash.
  • Opportunity cost.  If you buy a particular item, what was the next best thing that money could have purchased.
  • She is a spender.  It is very helpful to recognize your own spending behavior.  My wife is a super-duper-saver.  She saves money.  She hates to spend money.  I am a HUGE spender.  Check that.  I am a reformed-spender.

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  1. Davis Hipps on July 16, 2008 at 4:39 am

    How old is your daughter? We’re trying to teach our 6-year-old and 4-year-old about money, and they do pretty well, but I don’t see our 4-year-old grasping the “If you spend it all now, there will be nothing left in the future” concept. Then again, maybe I’m not giving my child enough credit. At what age did you start teaching your daughter about money?

  2. Saving Freak on July 16, 2008 at 5:35 am

    I cannot agree that Joe is a “reformed-spender.” I think the word recovering would be more appropriate. You could say Joe is finally on Step 12 of his Spendaholics Anonymous program.

  3. Rindy Walton on July 16, 2008 at 6:06 am

    Keep it going–that’s exactly what I did and my guys are now teens and although they still try to “weasle more money out of me”, it realy does work!!

    The hardest part is not giving in as a parent, especially when we (and our kids) know we could easily purchase it for them. Planning ahead of time and sticking to it, being intentional, is the way to go!

  4. ConnieB on July 16, 2008 at 8:12 am

    I applaud you for teaching your daughter! Sometimes I think that teaching my daughter about money is far, far more important than most anything she will learn in school!

    I know not learning to manage my money until I was 25 hurt me a lot more than the occasional “c” in classes….

    I am glad she did so well with your lesson. It probably made for a much more peaceful vacation!

  5. Tina Harkey on July 16, 2008 at 1:45 pm

    We let my daughter (she’s 10) save her allowance this summer and she will get it right before we leave for vacation to have to spend. She has to make her bed, clean her room and her bathroom has to be clean also to get her $10 every two weeks. So she has $65 (she cleaned the cat house outside & did some other things to earn a few extra dollars).

    She knows that will be it. We might buy a couple of back to school outfits at the outlet mall that I will pay for (she also will be told what that budget is before we go) but other than that even gum is on her if it is extra.

    She is doing really good with this program and has had about $30 in her purse all summer that she hasn’t spent (thus will be added to her $65). When we go to the store if she asks for gum I ask her where her money is and tell her she can buy it. I buy popcorn at the movies for us, but if she wants candy – it’s on her dime. Boy has she learned to make wise decisions. We’ll go look at clothes and she’ll pick something up and say that is wayyyyyyy to expensive and put it right back down. It saves so many arguements!

    The good thing is she said she hopes to buy a hoodie that says Panama City Beach on it…score for me that’s one less piece of back to school clothing she will need for fall!

  6. […] Part One – Twenty Dollars […]

  7. Dawn Kerr on July 17, 2008 at 11:38 am

    We did something similar too on our recent RV trip. With four kids, though, we only handed out $5.00 per kid. Anyway, it was really interesting to see the different “money” personalities come out. We had one child agonize and analyze and think and re-think each purchase, then actually return with money left over. One child wanted to buy a gift for everyone in the family and had a hard time making sure the money stretched. Our eldest son, 6, went bonkers with the money early and then moped for the rest of the trip. The youngest wanted to buy something at the first stop (about 20 minutes from our house), was talked out of it, and then forgot that he had the money the whole rest of the trip.
    We also teach our kids the 80-10-10 idea. Each time they get money, 10% is tithed, 10% goes to long term savings and 80% is theirs to keep. At this stage where the amounts are small, I’m the banker for their savings and I’m giving them 10% monthly interest to show them the value of compounding interest. Gonna have to rethink the 10% interest when the account balances get big….

  8. Vicki on April 27, 2010 at 12:14 pm

    We did the same thing prior to going as a family to Disney World. They knew 6 months in advance we were going and we bought a “tour book” so they could even plan the “route” through the park. But we gave each child $20 to spend anyway they wanted – same idea and then they were also encouraged for the months ahead to save money to add to that $20 when they went. My “spending” daughter took to the last day and then had to concentrate harder on spending her money than enjoying the last day there… We laughed and going home .. she said she would have not stressed about it so much and maybe not even have spent it. My kids are almost 30 now and lessons like this have stayed with them all these years. My son recently got married and had $10,000 in the bank. He REALLY does not like to spend money!

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