Rob and Sherry talk about how to teach your kids about money. They discuss the different money personality “types” and well as some learning goals including saving, budgeting, and investing.
The 5 Money Conversations to Have with Your Kids at Every Age and Stage
| Rob Walling: | Episode 100. You’d think we would have thought of something more grandiose to do, like having 100 people on here giving us verbal testimonials. |
| Sherry Walling: | That sounds grandiose. What’s more important than talking about money honey? |
| Rob Walling: | Over the past almost two years we’ve been doing the podcast because we do it weekly and we’re up to episode 100. We’ve made our way to where we have thousands of unique downloads per episode. Tens of thousands of unique downloads per month. We have 42 worldwide iTunes reviews, all five star. We have folks who are helping support us via Patreon that support ZenFounder.com. |
| We really want to take this time to thank you our listener because without these numbers going up into the right people stop doing podcast. You lose the motivation to do it. Every week as we see the download numbers increase and we see new iTunes reviews come, and we see the money coming through to support the show, it feels great. We want to thank you as a listener and we just look forward to continuing to travel this journey that we’ve traveled over the past couple of years. | |
| Sherry Walling: | As we mentioned at the beginning, our conversation topic today is about money, about dollars. We have been revisiting this part of our life with the new year, both in terms of thinking about our own family budget and our business budgets and what we want to accomplish financially this year. But the focus of this conversation is how to talk to kids about money, because our kids are 10 and six and they want stuff, believe me. So we’ve had lots of conversations lately, especially around the holidays around resources and how to use them, how to save them. |
| What’s a valuable expenditure when you have limited resources. It’s really inspired us to think carefully about how we’re getting our kids ready for money management as adults by getting them started now. | |
| Rob Walling: | Yeah, and so every once in a while I’ll come across a book that is about how do you talk to kids about money and stuff like that. Some of them have been good, some of them have been not so good, but one that I read recently that I was pretty taken by, I felt like it did a really good job of helping me rethink the way that I view how our kids spend money, it’s called The 5 Money Conversations You Should Have With Your Kids at Every Age and Every Stage. I got it in audio format but it’s available in Kindle and in physical. |
| We’ll link up the Amazon link in the show notes. The idea and what I liked about this book is I’ve heard in the past allowance versus no allowance, chores versus no chores, how to teach them about investing, how to teach them the values and such. What I liked about this one is that the co-authors have already written a book for married couples about figuring out your own personality type, your spouse’s and then figuring out your compatibilities and incompatibilities and how working together you can figure out how to surmount those, because money obviously is such a big deal in a marriage. | |
| They adapted that for kids, and so they have these five money personality types that they define in the book. To be perfectly honest, I did not dig into their backgrounds and look at how much scientific evidence there is, because they have whole test you can take and get the personality types, which we had our kids take and you and I will take them as well. Whether the stuff is valid or not, the themes they chose and the personality types they have, they really resonate with me. | |
| It made me better able to categorize how our two boys think so differently about money. Once they took these tests and it matched up with their personalities it was like, “Oh yeah. There’s something here.” | |
| Sherry Walling: | Scientifically valid or not it sounds like it was really useful to you. Any tool that gives you better language or helps you to categorize information in such a way that it makes it easier to talk about a pretty complicated nuanced topic then I think it’s a useful tool. We don’t have to worry too much about the scientific validity. I think we can just use it as something that’s helpful and meaningful to you. |
| Rob Walling: | These five personality types, the first one is a saver and I think it’s kind of self-explanatory. Someone who tends to feel better when they’re saving money for a rainy day and they look at the future and they think down the line. Second one is a spender, so kind of the opposite. It’s people who tend to spend money, don’t tend to think about savings, tend to get joy out of spending and getting something for that. The third is a risk taker. This is like an adventurer, a deal maker. These are idea people. |
| Tends to be more entrepreneurial type folks who are willing to take risks in order to get rewards and they enjoy the thrill of that. The fourth is a security seeker. This one often overlaps … Oh, I should take a step back and say that according to the book each one of us have a primary and a secondary. Security seeker often overlaps with saver because a security seeker is all about the future. They want clear expectations. Think about a child who wants to know everything that’s going to happen over the next eight hours and then if that changes it’s uncertain and it makes them really concerned by that. | |
| They crave information. They understand delayed gratification. They’re always prepared for things. They like the familiar, often indecisive when thinking about spending money because they don’t want to make the wrong decision. That’s a security seeker. Like I said, it can go hand in hand with saver. It doesn’t have to but in one of our sons, our six-year-old it actually does. | |
| Sherry Walling: | That is a really, really accurate description of his personality. |
| Rob Walling: | That’s what I liked about it. As I was reading it, soon as they say indecisive, stressed out when they spend money, that was like a key point in the book, is that a security seeker is stressed out. Same with the saver. Thought, “Oh, that’s why he says, ‘I don’t know. I don’t know.'” “Do you want to buy that?” “I don’t know.” “You have the money.” “I don’t know if I want to buy it. Should I buy it?” It really stresses him out even at six. It’s like, “Okay. Now I get that.” |
| They give you some strategies for how to cope and how to actually help saver spend money on things that they really want and give them time to think about it in advance. Like we’re going to go to the store, think about whether or not you want to spend and then don’t stress about it. That’s what I found was helpful. | |
| Sherry Walling: | There’s one more, right? The fifth one. |
| Rob Walling: | The fifth one is called the flyer and no one in our family has this one actually. A flyer is where money is all about relationships. They’re comfortable with last minute changes, very flexible. They value time with friends the most and they can tend to look flaky in terms of money. They have no interest in money, just the means of how they interact with friends. They were talking about how flyers will often treat all their friends, their buddies to whatever it is. Sodas after school or something. They blow a bunch of money. |
| If you as a parent you might be thinking, “Oh, my gosh, this is not … They’re getting taken advantage of. This is terrible.” That can be part of a child and an adult’s money personality. We actually spoke with both of our kids about their personality types. Like I said, all four of us took the money personality quiz and I talked to both our six-year-old and our 10-year-old about it. Let’s hear what they have to say about their own money personality types. How old are you? | |
| Speaker 3: | Six. Almost seven. |
| Rob Walling: | I wanted to talk to you today about money. Do you remember how you and I took a test on the computer a couple of weeks ago and we figured out your money personality? |
| Speaker 3: | Yeah. |
| Rob Walling: | Do you’re remember what your personalities were? There’s a primary and a secondary. |
| Speaker 3: | Yeah. |
| Rob Walling: | What were they? |
| Speaker 3: | I don’t know. |
| Rob Walling: | You don’t know? The first one was … The primary was called security seeker. |
| Speaker 3: | Yeah. |
| Rob Walling: | That means that you like to think long term and really think hard about your decisions. The secondary was a saver, and that means it’s someone who prefers to save money rather than spend money, because you often have big things that you want to buy later, and you feel like you don’t want to make the wrong decision with your spending. Does that sound accurate? Does that sound about what you think your own money personalities are? |
| Speaker 3: | Yeah. |
| Rob Walling: | How does it make you feel when you spend money to buy something? |
| Speaker 3: | I don’t really know. |
| Rob Walling: | Does it ever make you … Do you ever stress out over the decision of what to buy or how much to spend? |
| Speaker 3: | Yeah. A lot. |
| Rob Walling: | Yeah? That’s your thing, huh? |
| Speaker 3: | Yeah. |
| Rob Walling: | We’ll be in a store and you’ll say, “I don’t know. I don’t know if I should buy this.” |
| Speaker 3: | Yeah. I’ll be like that. |
| Rob Walling: | Say hi. |
| Speaker 4: | Hi. |
| Rob Walling: | How old are you? |
| Speaker 4: | I am 10 years old. 10 and a half actually. |
| Rob Walling: | I wanted to talk to you today about money. Do you remember the money personality test that we took? |
| Speaker 4: | Yeah. |
| Rob Walling: | Or I guess you took it on your own a couple of weeks ago? |
| Speaker 4: | Yeah, and it came out as risk taker spender. |
| Rob Walling: | Risk taker spender. Did you know that you’re the exact opposite of your brother? |
| Speaker 4: | Yeah. Polar opposites. |
| Rob Walling: | Yeah. He is a security seeker saver, which is funny. Do you remember what risk taker means? |
| Speaker 4: | Entrepreneurial. |
| Rob Walling: | Entrepreneurial yeah. |
| Speaker 4: | Because they make businesses and they take a risk. They spend some money to start a business, and if it doesn’t go well for them they could lose money. That’s what a risk taker is. |
| Rob Walling: | Right. Yeah. Risk takers their personality seeks adventure. They’re deal makers. They’re idea people. |
| Speaker 4: | Yeah. |
| Rob Walling: | Entrepreneurs fit into that. You don’t have to be an entrepreneur to be a money risk taker, but in your case I think you probably are. Then a spender is your second money personality. |
| Speaker 4: | Yeah. |
| Rob Walling: | What do you think a spender does? |
| Speaker 4: | Spends a lot of money. Like there’s a hole in the pocket. He or she likes to spend money a lot. |
| Rob Walling: | Yeah. You don’t have to fit into that but spenders don’t feel bad about spending money. They do like coming home from the store with something, right? It makes them feel good to get something when they’re out or when they’re, I don’t know, shopping and such. Whereas savers it tends to stress them out to spend money. You’ve heard about our kids, now let’s take a look at each of our money personality types. Sherry your primary money personality is a saver and your second is security seeker. |
| Sherry Walling: | That sounds right. |
| Rob Walling: | Does it? Why do you say that? |
| Sherry Walling: | Because I think that I would just much rather have money in a bank account that I can look at and see than spend it towards relationships or being a high flyer, or like there’s something that is very comforting to me about the certainty of what I know that I have. It think in that way I’m fairly risk averse. |
| Rob Walling: | Yeah. Right. Because like in terms of stock investments and risking money in order to make money that is not something that comes naturally to you at all. |
| Sherry Walling: | No, not at all. I don’t know if that’s parts of being brought up in a family where resources were very, very limited, and so there was a really strong orientation toward not knowing when the next crisis was going to happen and trying to be really for it. Or if that’s just more deeply seated within my personality that’s not necessarily a product of being nurtured in that kind of environment. |
| Rob Walling: | Right. Well, now if someone knows you today, both you and I we live very differently than we did growing up. Both of us came from limited means I’ll say and if you were to hang out with us for a few weeks here you’d see us hiring baby sitters, going out to dinner and not necessarily worrying about the cost of the food we’re eating or the cost of the show that we’re going to. Both of us value good quality stuff, something we didn’t have when we were young. How do you reconcile that now with being a saver, security seeker in terms of having much more freedom to spend money? |
| Sherry Walling: | I think it’s all relative. I mean, yes we’ll go out to a nice show and a nice dinner once maybe twice a month. We actually aren’t people who spend a lot, a lot of money on entertainment. I think relative to the amount of money in the bank account, the expenditures that we have, at least for recreational kinds of things, are relatively small. |
| Rob Walling: | Yeah. It’s funny, there’s that phrase living within your means and over time our means have gotten larger and larger. We’re able to perhaps be a bit more … extravagant is not the right word because it’s not like we’re going buying gold bottles of Champaign at places, but we do go to nice restaurants and don’t think twice about going to a nice restaurants ordering what you want on the menu. It’s because within our means it’s changed, right? Over the past 10, 20, 30 years. |
| Sherry Walling: | Right. It’s still not spending in a way that’s risky. There’s still a big giant cushion between zero in the bank account and those expenses. |
| Rob Walling: | Right. Whereas back in the day a $6 sandwich at Subway could put you towards the brink. I know from first hand. Then my money personality my primary is risk taker, which is more the entrepreneurial so that makes sense that my secondary is a saver, which makes a lot of sense. I actually feel like I’m a security seeker as well because the reason that I became entrepreneurial was not because I really wanted to start stuff, it’s because I wanted the security of having income or having more money. I saw that money brought security in a certain sense and that was why I really started businesses. |
| Sherry Walling: | You wanted you get more money faster. |
| Rob Walling: | Yeah. |
| Sherry Walling: | To have more security. |
| Rob Walling: | I know, which maybe is the definition of a risk taker, is that right? It’s funny. They all tie together in me I think. |
| Sherry Walling: | Yeah. They do, I think you have a very robust and mature way of thinking about money and handling money. I think all of these components are here within you to some extent. |
| Rob Walling: | I think one of the things that is so good about our relationship is that although I have that risk taker thing, so I like to start businesses, which often bring in more money, but I also like to have that money. Left to my own devices I would just amass a bunch of money in a bank account. You bring the side of let’s use that to experience things and let’s use that to travel and to see people and to go to shows and to do that. |
| I would do that very, very rarely because I have that saver component whereas you have the experiential component that really isn’t taken into account by these money personalities. You do value experience over just amassing money in the bank, and I feel like we do a good of allowing each other to balance each other out. That if I say, “Look. There’s a money problem, we need to back off.” You’re like, “Boom! Done.” If you say, “Look, we need to travel.” I look in the bank account and I’m comfortable with spending a couple grand to take a trip, boom, done. | |
| We don’t fight each other for fighter’s sake. We only raise red flags when there truly are red flags like we haven’t traveled in a while and things are going to implode, or we don’t have enough money in the bank account and things are going to implode. | |
| Sherry Walling: | Yeah. I think considering how tricky finances can be for lots of couples I think we’ve done pretty well and gotten off pretty easy in that we both have clear orientations and clear personalities when it comes to money. But there is also a level of flexibility where I have no issues with the risks that you take or your risk taker personality, because first of all I trust that that little pile of security money will be in that savings account somewhere and that’s never wavered. Once that’s there all the rest is play money in a way. |
| Like it’s fine with me for there to be lots of risk taking or spending to some extent. I also think that we are okay to spend money but have similar values around how and how much and when and why we do that, so we don’t have necessarily a lot of tension or contention about how money is spent. | |
| Rob Walling: | Right. It’s funny because you’ll get a package from what is it? Le Tote or Anthropologie or thredUP and you’re always quick to point out like, “Look at this amazing thing I got for 50% off.” Or, “I got these new shoes and they’re hundreds of dollars off.” Like if you ever actually came home with a several hundred dollar handbag that you paid full price for my jaw would drop, right? |
| Sherry Walling: | Because it would be so out of character for me. |
| Rob Walling: | Yeah. You just don’t do it. You’ve always bought at a discount. You had, I remember it was a sweater or a shirt you used to wear when we were dating that you got for 10 cents at a Tuesday thrift store sale. |
| Sherry Walling: | 10 cents Tuesday, yeah. The thrift store. Yeah. |
| Rob Walling: | 10 cents Tuesday. Yeah. You were super proud of that. Now that 10 cents is maybe a few orders of magnitude larger but still it’s about getting a deal for you. Now it’s about like, “I want something quality and I’m not paying full price for it.” |
| Sherry Walling: | Yeah. There’s nothing like getting a pair of beautiful Italian leather shoes for $40 or $50 in my opinion. Coming back to the topic of talking with kids about money, it sounds like it was really helpful for you to think through the kids’ personalities and to talk with them about it. But one of the conversation points that we have been batting around for the last couple of months really is allowance versus no allowance. |
| We talked about this on the podcast before but one of the things that I really like about a more entrepreneurial mindset is really equipping kids to have creative ways of earning money or making money that are not allowance based. They have to do something for the money or they have to be creative in some way or sell something, or basically hustle a little bit. That’s been a model that’s worked well particularly for our older son when he wrote a book when he was eight and he still has revenue coming in from that book. | |
| We’ve also encouraged our kids to just get creative in different ways, whether it’s selling their services as musicians or doing chores for us or for people around the neighborhood. Basically like making a deal and having conversations with people about money and how to get money, and believing that they have valuable services and things that they can do, and that that’s the best framework for them to begin thinking about how money comes into their lives. | |
| Rob Walling: | Right. For a long time we have done no allowance and the reason behind that was to try to teach our kids if you’re going to make money you need to be entrepreneurial. That was the justification and it hasn’t worked out the way I had hoped. I think you and I both wanted them to do more entrepreneurial things, and for whatever reason it is, they just haven’t done it. We’ve encouraged them. We’ve given them ideas and they haven’t taken it by the horns and pushed it along. |
| Perhaps it’s a bit too much to expect from a six and a 10-year-old, especially having moved in the middle of the year so we don’t have the network that we used to have. Often times if you’ve got to be entrepreneurial you might want to make Christmas cards is one example we gave to them. We don’t really have a network here and so it would all be remote. Just different things have popped up. We’ve recently reopened that discussion of allowance versus no allowance and in listening to two or three different books on … Some were just about investing and family finance and then this book about five money conversations. | |
| They all said allowance is a good thing because it teaches. There’s very specific things that it teaches kids. One of the things I did take away from those books is several of them said don’t make it based on chores. It’s not about work being done. That the work being done is just part of the family. Right? If you’re going to be part of this family you’re going to empty the dishwasher, you’re going to put away your own clothes, and that kind of stuff. Really make the allowance a teaching tool that stands separate from all of that. | |
| Sherry Walling: | I really like that. I think that’s been really important. I don’t want to nickel-and-dime with the kids or negotiate with the kids around being good citizens in our household. I want them to be people who see that there are things that need to be done and do them. Of course that’s every mother’s dream, but they will put the dishes way. They do have a set list of things that are part of their routine that they contribute to the household and are acts that help them to take care of themselves and their things. |
| I don’t like the idea of paying them for that. I feel like that’s just part of life and you just have to do that. | |
| Rob Walling: | Right. If we find that the allowance experiment does not work out and suddenly we’re like, “You know what guys, we’re not going to do allowance anymore.” They’re going to be disappointing but we don’t suddenly want them to think, “Oh now I don’t have to do anything around here.” Right? They really are … I don’t think they should coincide because of all those reasons. |
| Sherry Walling: | Yeah. Not if they want to eat here. |
| Rob Walling: | Yeah. I agree. Let’s listen in on the conversations I had with our six and our 10 years old about the specifics of allowance. Your mom and I have decided that we’re going to start giving you and your brother a monthly allowance. |
| Speaker 3: | Wait, monthly? What’s monthly? |
| Rob Walling: | Every month. Once a month you’ll get it. |
| Speaker 3: | How much money will I get? |
| Rob Walling: | We’ve decided to give you and your brother $15 a month each. |
| Speaker 3: | For doing stuff like chores and stuff? |
| Rob Walling: | Well, see, doing chores is just part of being in the family, right? That’s just part of every day. Putting dishes away. We all are doing work and doing laundry and stuff. This money is actually to teach you something. It’s to teach you how to budget. It’s to teach you how to save and it’s to teach you how to make some money last and not spend it all right away. |
| Speaker 3: | Oh. |
| Rob Walling: | Or to be mindful about the things that you do spend it on, so that if you decide you want a big LEGO set that maybe you save up for a couple of months and maybe you even do some entrepreneurial things like writing a book like your brother did, or raking leaves or shoveling snow in order to earn more money and get to that LEGO pack faster. |
| Speaker 3: | [crosstalk 00:21:50] |
| Rob Walling: | Yeah. |
| Speaker 3: | Well, I’ve been wanting a LEGO set and it’s about $100, so how much … I already have like 24, so how much will I need? How much months will it take until I can get that? |
| Rob Walling: | Well, if you already have 24 and you need a 100, that means you need about $76. That’s about five months if you saved all of your money, but what I think is that if you want to get to that LEGO set faster that we can talk about some of these more entrepreneurial things you can do, like making Valentine’s Day cards and selling them. |
| Speaker 3: | Yeah. Probably. |
| Rob Walling: | Yeah. That’s I think a good way to do it because you can make $5, 10, 15 just doing one of these little entrepreneurial projects. |
| Speaker 3: | Yeah. I probably could. |
| Rob Walling: | Yeah. Your mom and I also want to match every dollar that you save. |
| Speaker 3: | What’s that? |
| Rob Walling: | That means that if you decide that of your $15 that you want to save it for a while and not spend it, we will actually also give you $15, another $15 to match it. Or if you decided that you want to spend 10 of your dollars and you want to save five, that we will do a dollar for dollar match of that $5. That means if you put in five into your … We’re going to set up a little savings account for you, and if you put in $5 and leave it there, we will put five in as well. |
| Realistically, if you were to decide to save it all you could actually have more money in that account. The reason we’re doing that is we want to encourage you and your brother, both, to think about saving a portion of your money. | |
| Speaker 3: | Yeah. I want to save a few $15 because [inaudible 00:23:35] take a little bit of a long time to get $100 from like a 24 head start. |
| Rob Walling: | Yeah. Then the other thing is we want to encourage you to give some of your money away to help people. We’re going to talk about taking about 10% of your money, which is about a $1.50 each month. Figuring out if there’s a cause or some people or some type of charity that might need it in order to help others. How does all that sound? Does it sound fun, complicated, stressful? |
| Speaker 3: | Stressful at the end. |
| Rob Walling: | Why? The giving? |
| Speaker 3: | Yeah. |
| Rob Walling: | You don’t like that part? |
| Speaker 3: | I don’t like giving or sharing anything. |
| Rob Walling: | You don’t like giving or sharing? Why not? |
| Speaker 3: | I don’t know. I just don’t. |
| Rob Walling: | It makes you feel stressed out to have to give some of your money away? |
| Speaker 3: | Yeah. |
| Rob Walling: | Okay. Well, we can talk more about that. Giving is not something that you should be forced to do because it’s just going to make you resent it. We will talk more in depth about why your mom and I give and why other people give in order to help those around them. Your mom and I want to start teaching you guys a little more about money and we want to do it by giving you each a monthly allowance of $15. The idea behind that is to teach you to budget and use that money over the course of say an entire month to get what you want. |
| Then if you want extra money that you would do some of the entrepreneurial things we’ve talked about like writing another book, making and selling cards. You’ve talked about doing a YouTube channel and trying to make money on ads. There’s a whole bunch of ways. | |
| Speaker 4: | Yeah. |
| Rob Walling: | You talked about making a simple video game. A whole bunch of ways where you could do it. If you want something that’s more than $15 obviously you either have to save up over the course of months or you’ll have to earn more money. In addition, we want to encourage you to save so we want to offer you guys each … basically it’s a dollar for dollar match. That if you put money in a savings account that we will match 100% of that. It’s a big commitment from us to do that. |
| Speaker 4: | What is that supposed to mean? Like … |
| Rob Walling: | If you were to take your $15 and take five of it and put it into a savings account and you’re not going to touch it for a while, we’ll put another $5 in. You’ll net … |
| Speaker 4: | Have $10. |
| Rob Walling: | Yeah. |
| Speaker 4: | It’s sort of like teaching me how the bank gives you like … |
| Rob Walling: | Interest, yeah. |
| Speaker 4: | … 1.5% of the money you have in the bank? |
| Rob Walling: | Right. Except we’re going to do a lot more than that, right? Because the bank gives you like 1% over the course of a year … |
| Speaker 4: | Yeah, but you’re doing like times two or 100%. |
| Rob Walling: | Right, because we want to encourage you guys, and especially you since naturally you have an inclination to be more of a spender. We want to encourage you to save money for longer term goals, and whether that money is for your entrepreneurial endeavors, maybe to fund your next book on your own, of if it’s to save up for a larger LEGO set or a big video game, or something that you may not have the immediately money for, we want to encourage you to do that. |
| Speaker 4: | You’re saying that every month you will match what I have in a savings account dollar for dollar? |
| Rob Walling: | Yeah. We will match what you contribute that month to the savings account. Does that make sense? If you had $100 in the savings account at the start of the month, you add five bucks, we’re going to add five bucks too so you’ll have 110 and then the next month that would be the same. Frankly, any money you put into a savings account that you’re going to not touch for a while, I’d be willing to match that. |
| Speaker 4: | Okay. |
| Rob Walling: | All right. Any questions? |
| Speaker 4: | No. Not really. |
| Rob Walling: | How does it sound? |
| Speaker 4: | Good. |
| Rob Walling: | Do you think it’s going to be … You think you’re going to learn something from this? Kind of getting a little bit of money at the beginning of each month and having to think through, scheme, plan? Am I going to invest it in something to grow it? Am I going to spend it? Am I going to save something? I was actually thinking about there a couple of companies that you might know about, you and your brother, but you can buy one share of Disney and they make Pixar, right? We’ve been to Disneyland and Disney World. We can talk about that. You’d actually have to save up for that. |
| Speaker 4: | Yeah. I just realized that monthly allowance is like teaching me about pay day. |
| Rob Walling: | That’s exactly what it’s teaching about. Yeah. Disney stock is at like … |
| Speaker 4: | $108. |
| Rob Walling: | … $108 so it might take a while to save up. |
| Speaker 4: | 109 because it’s 108.98. |
| Rob Walling: | Right. Maybe we would wait until there’s a little bit of a downturn, but that could be an interesting venture is to own just a simple stock and watch it over time. Well, cool. Thanks for the chat. |
| Speaker 4: | Bye. |
| Rob Walling: | From those conversations you can hear I was trying to communicate to the kids like there are some things that we want you to learn from this experience. Let’s maybe pull four … I think there’s four main things that came out of those conversations. Let’s talk through those. |
| Sherry Walling: | One of the first goals is to understand saving. Understand delaying gratification, setting money aside so that you can either purchase something larger that you don’t have enough money for today right now, and so that the kids have a sense that those bigger dollar amounts do mean some power. They mean some security, and that the saving both feels good and is helpful in the long run. |
| Rob Walling: | Right. That’s why we offered to match their dollar for dollar, their savings. Every adult out there know that’s a pretty generous offer, right? I think over time we’ll have to back that off, especially as they make more money, but we want to especially encourage our older son who is that risk taker spender to think more deliberately about saving. Then we want to encourage our six-year-old, who although he is a security seeker saver, we want him to think long term, because as a six-year-old four or five months that’s a tremendous amount of time. |
| A tremendous amount of time to think about saving for something. If we can help him feel better about that and shorten that a little bit even as he saves for something large, because the pride that he’s going to have when he walks into that store and buys it with his own money, it’s going to be huge. | |
| Sherry Walling: | After saving the second big learning impact is budgeting. Having a sense of how much money is available and allocating money in a way that makes sure that you have enough to cover your expenses basically. Even if your expenses happen to be big lollipops and small LEGO sets. |
| Rob Walling: | Right. The idea here is it makes it easier for us now to say, “Look.” When we’re at a store and they want to buy something we say, “Do you have the money? If you do? Do you want to spend it? If you don’t, add it to your wish list.” Then if your wish list allows them to either save up for it or ask for it at a birthday or Christmas or some other event. I like this idea of the kids having more … at this age starting to have more control over it rather than us every time having to make a decision, having to make a conversation, should I buy this for them? Just getting away from that I think is a good thing at this point. |
| Sherry Walling: | Thirdly, don’t worry. We’re not giving up on our dream of entrepreneurship in the kids. I think one of the things that having this set amount of money each month might spark, we’ll see, is that I think once you have some spending money and money available you might want more. I think that leads to this natural progression of, “Okay. Well, how do I get more money or the most amount of money for fairly minimal effort or limited output?” I think this leads to those entrepreneurial questions of, is it time to write another book? |
| Is it time to get some little neighborhood service going on? We’re hoping that again, having a sense of their own money will spark some creativity and some entrepreneurial motivation. | |
| Rob Walling: | Yeah. I agree. Honestly $15 a month, it isn’t a ton of money. The kids like LEGO sets and they’re expensive, and just a lot of stuff even little iOS apps, they like to buy new games and such. They’re going to have to figure out ways to make more money. 15 a month is not going to be as much as they will probably want to spend and so I’m hoping that that is a good teaching experience in terms of encouraging them towards entrepreneurship. |
| I think the fourth learning goal, and I brought this up briefly with our 10-year-old, not necessarily our six-year-old at this point, is the potential of investing, because this is something I got into pretty early on. I read some books when I was between 10 and 12 and I think I bought my first share of stock when I was around 12/13 years old. Again, this was the risk taker saver in me, because I saw that the risk taker was willing to invest a little bit of money in a company with the idea that if it made more money I would save that money later. | |
| Talking to our 10-year-old about buying one share of Disney or one share of TGT, which is Target, only because they sell Minecraft mini figures and he’s fascinated with Target any time we see one. We don’t go out to retail much because we do so much Amazon stuff that he’s actually really fond of Target for some reason even though we go there like three times a year. I can see that being an interesting thing for him to buy and then he owns one share. We could get the stock certificate and we could talk through. | |
| He already know what a share of stock is versus a bond. How one’s an ownership and one’s a loan, but once your own money is in something it’s pretty interesting to see every month where it’s up, where it’s down. The good thing about Disney and Target are that they’re both dividend paying stocks, and so they pay let’s just say in the 3% to 4% annual return on your money. There’s obviously always risk of it going down in terms of the stock price, but if you own a share of Disney and then you’re getting $4 a year or $5 a year because it’s about 100 bucks for a share of Disney. | |
| Then you watch that stock go up or you watch it go down, you just learn a little bit about investing. They don’t tend to be such volatile stocks that he’s going to lose all of his money, but I think that whole conversation is interesting. I don’t know if the kids are going to be comfortable with investing. Especially our younger one, if it’s just going to be too stressful for him, something I’ll probably bring up in a few years. | |
| But I do think our older son is probably more ready to start thinking about putting a tiny amount in and just to learn about what it feels like to actually put some money on the table and look at getting a little bit of a return. | |
| Sherry Walling: | Well, overall this book, The Five Money Conversations You Should Have With Your Kids at Every Age and Stage, it sounds like it was a really important read for you Rob over the last month or so. You read it. I actually haven’t read it yet but I think the conversations that you’ve had with both of the kids and with me have been really important in terms of just getting everybody on the same page about how we’re thinking about money at this point. |
| Also creating opportunities for our kids to do some more hands-on learning with money and how to invest and save and also understand their own sensibility as it comes to money. | |
| Rob Walling: | Yeah. I agree. I think learning their money personalities has been really helpful for both you and I. I want to keep reflecting that back to the kids in terms of telling them when our oldest really wants to buy something in the store being like, “Look, remember, this is who you are and you need to maybe curb that desire every time we walk in.” For the younger one to say, “Hey don’t stress out so much about it.” To kind of encourage them to embrace more towards the middle rather than just being stuck in the mold that their mind tends to wander to. |
| Sherry Walling: | Sounds good. |
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