Teaching children about money: tooth fairies and money monsters

A conversation with a work colleague about how we motivate our children to try their best at school got me thinking: have I transformed into Money Monster Mom? I have been offering my boys financial rewards in exchange for demonstrating a good work ethic. At the same time, I’m hoping to help them get a feel for the value of money. Here’s a little story that sums up my approach. Let me know what you think and how you handle school performance, pocket money and personal finance discussions at home in general. You can hit the comment button on my website or send me an email. JC

My eight-year-old son has got more cash than I have. Notes are bulging out of the tin he has standing on his bedside table. It won’t be long before he will be able to swap his savings for the computer he has been eyeing.

Timothy doesn’t get pocket money. Not one pence.

He has earned several hundred pounds by getting 100% for spelling and multiplication tests and scoring goals in Saturday football matches. A few visits from the Tooth Fairy have added to the coins anchoring his tin.

He doesn’t receive any money for scoring 99% and below. After all, if you can learn it and it is not rocket science, you should get 100%, is my reasoning to him.

The Tooth Fairy pays Timothy good money for teeth that are in good condition.

Toothless Timothy: Rich rewards in his slipper.

Toothless Timothy: Rich rewards in his slipper.

Another way Timothy has bolstered his earnings is by lending me money when I am short of change in the morning to pay for his school lunches. I insist on paying back with interest – and I make the surplus a hefty, loan shark-style amount.

The longer it takes to repay Timothy, the more interest he gets from me. So, he is always eager to lend me a few coins. And he is always quick to ask for the “interest”.

Timothy doesn’t know yet that when he is older and asks to borrow money, I shall do the same – insist on repayment with a large dollop of interest. This is not because I want to make easy money off him but because I want him to understand from early on that debt, particularly short-term debt, is very expensive.

For now, I want him to feel the joy that money-lenders experience when they rake in the extra cash. Later, I want him to understand how quickly borrowers lose money and that it feels awful when the fruits of your hard work are wiped out by paying big interest.

In short, I want Timothy to keep away from the many micro-lenders of this world who tempt young people with easy finance deals through fun advertising on TV and the internet.

By now, you are quite possibly gasping with horror at my parenting style. And certainly I do wonder – regularly – whether I am doing the right thing.

But I am on a path now. And Timothy is on this path.

He is absolutely loving seeing his wad of notes grow bigger and pondering what he will be able to buy for them. I am liking the idea that I might be kindling an entrepreneurial spirit in my son and giving him a feel of the value of money.

You will probably be delighted to know that I have drawn the line at charging Timothy rent or getting him to pay for his clothing or other recreational activities. His money is his own.

A side-effect of this financial motivation is that Timothy has become incredibly ambitious at school, quickly clawing his way up the maths ability groups. His teacher has no idea why he is moving so fast.

Timothy voluntarily practises little sums every day in the morning after breakfast and times himself. What took him 20 minutes two weeks ago he is now completing in 15.

He actually says he enjoys the number work. Just the other day he asked me what kinds of jobs were available for people with maths. After all, he will need to do something after he has retired from his professional football career.

My sweet little chap came home last week with a special award given to him in front of the entire school. He didn’t understand what it was for.

The certificate noted that he was “taking responsibility for his learning and being an excellent role model”. So, I explained what that meant – and rewarded him with a particularly large cash bonus. Well, large for an eight-year-old.

Am I giving him the right idea about personal finance or have I become Money Monster Mom by linking success in school work with pocket money? Time will tell.

In the meantime, I have noticed that a new report compiled by child psychologists on how to introduce young children to basic money concepts has been released in the UK. You may be relieved to hear that I’ve got it on my list of weekend reading.

However, the research findings may have come too late for Timothy.  According to Kirsty Bowman-Vaughan, an expert on young people and money at the Money Advice Service: “We know a child’s money habits are formed very early in childhood – they are usually set by the age of seven.”

I wonder what Tiger Mom would make of my early wealth building lessons for Timothy. I suspect she would purr with delight.

* This article was first published on global investment and money news website BizNews.com.

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