Episode Transcript
[00:00:00] Welcome. Welcome. On today's episode of the Small Business Hustle, we're going to be talking about kids and their money.
[00:00:08] Alright? So today we want to know what happens when you give kids money, when you give them truly give them their own money and let them use their own money. We're going to talk all about it in today's episode of what I have observed when watching children who have their own money versus children who do not have their own money. Thank you so much for joining me. And if you love this podcast, please share it with a friend. Friend.
[00:00:41] Welcome. Welcome to the Small Business Hustle and hello. Hello. I'm Molly B. Your host and owner of MJ's Market, a small general store in South Dakota. This is a weekly podcast where we discuss operating a small business.
[00:01:04] All right, before we jump right in and learn all about the lessons I've learned watching kids with money, we are going to do a quote. So today is a pretty well known quote. If you give a man a fish, you feed him for a day.
[00:01:20] If you teach a man to fish, you feed him for a lifetime. Why doesn't this relate to our children and their finances?
[00:01:29] I am an advocate for you to give your child money.
[00:01:35] It's not just that simple and it's not just that straightforward. But we're going to talk all about it today.
[00:01:41] In this example, when you give your child money, you will give them their own budget, their own wallet and their own money. And I guarantee you will notice a behavior change in them. It will be a positive change in their behavior.
[00:01:57] Now what I would like to tell you is that I can tell children apart based on their behavior patterns in the store. Who children have their own money versus children who do not.
[00:02:11] Some of the tendencies for children without their own money is that they will beg, they'll say things like, mom, mom, mom, please, please. And they do this like dance. It's like a dance ritual of like up and down trying to convince their parent to give them the thing that they have decided they want.
[00:02:31] And, and it. And they never seem pleased. You know, they never, it's not enough even if they just got something. Like I'll hear the parents say, you know, you just got the thing at the last store and the kid's not happy. And so it's still this problem, right?
[00:02:48] So the example that really drove home for me was a story of my nephew.
[00:02:55] And my nephew had gotten money out of his dad. So he normally doesn't get money, he just gets things. And my brother was busy talking. And so in order to appease his children, he gave them each $5. And they were in my store, and so they were not. Their dad was talking to a relative, and so he was unable to help them pick out the things. And so I was helping them pick out the things, but. And my younger nephew, five at the time, decides he wants this giant bag of candy. And I said, well, you just don't quite have enough for this.
[00:03:28] And he's kind of bummed and he's thinking about it. And then I said, well, but, you know, I mean, why don't you. What about this one and this one? You could get both of these and you'd still have money left over.
[00:03:38] And he was like, what?
[00:03:40] And I could see in his little brain that he was so dumbfounded he could not, for the life of him understand how he could get two things and still have more money left over.
[00:03:52] And in that moment, it occurred to me, oh, my Lord. In all of his five years, he has never understood the value of an item being different than another, because he has always been told, you can get one thing.
[00:04:06] It's the curse of you can get one thing.
[00:04:11] So now he has no idea that one thing is worth more than another one thing. Because to him, of course, he just wants the biggest bag because he can only get one. And when he realized in that moment he could get two things, and he asked me several times, and there was a lot of computing going on in that little mind, it pushed further for me the idea that children should have their own money. It is absolutely so valuable for them to have their own budgets. Now, here's the thing, though. A lot of people, they don't fully understand giving their children their own money. And that's where you really have to. You have to understand it, and you have to set it all up in advance, and then you have to stick to it.
[00:04:52] So when you decide to give your own children money, you have to decide on the guidelines or the rules. And you have to remember that this is their money. So if you give them that money, they can spend it on whatever they want. Doesn't matter if you agree, doesn't matter if you like it, because someday they're going to be 18 and they're going to do it anyways. You might as well start learning this lesson today now. So you. It's going to work faster if you give them freedom to spend the money how they want. Now, granted, there may be some guidelines. Maybe it's that they can only buy so much candy a week or something. You know, one item you know, you don't want to have to rot their teeth out or turn them into sugar addicts. So, yeah, there can be guidelines. But as far as like, you know, this toy versus that toy, maybe you think they already have six of the same toy. Too bad you do not get to make that decision. This is their money. They are going to decide how they are going to allocate their funds.
[00:05:50] So you set these firm boundaries. You say the budget is this much, and then you say, I will not tell you what you're going to spend your money on, but I also will not buy you anything at a store, but you can buy anything you want. Obviously following in those guidelines and parameters that you have decided ahead of time moving forward, parents hearing this will be skeptical.
[00:06:15] This won't work with my kid. Okay? That's the thing, right? It's not going to work with my kid, except it will let them learn.
[00:06:25] The very first thing that's going to happen is they're going to be broken. Okay? It's going to happen. Just be prepared. They're going to be broke. This is the hardest for you.
[00:06:36] You have to remember they are going to be broke. They're going to be your best friend and they're broke and they want money. And the answer is no.
[00:06:45] You will give them money on the specified payday and that is it. There is nothing that you are going to buy for them. And you are also not going to give them a loan.
[00:06:57] You can teach them about loans later, but right now there are no payday loans. They will not learn this message, this lesson. If you are constantly bailing them out, we're going to be prepared for them to overspend and they are going to be, you know, begging still, right? Because they, they have to unlearn that behavior. Depending on how young they are when you start, this can really depend on how long that takes.
[00:07:24] So what happens when you overspend you as an adult? What happens?
[00:07:30] Does a money overlord swoop in and buy you something that you want?
[00:07:35] I hope the answer is no, because it should be no.
[00:07:40] All right, so this is how the program has to work is that there is no money overlord swooping in and giving out money whenever you get in a tight spot.
[00:07:50] There is a sweet spot between the child being old enough to handle this, but not being too old that they have too much unlearning to do. And I'm. When I'm talking about a child, I'm saying, I mean, I have some children with many children in the family, and the children are about three or four. And they have their own money now. I would. I would argue that it is possible. It will be hard for many children and many families to switch over at 3 or 4, but, you know, once they're able to count, you sure could give it a try. I have some parents that have a slightly modified. They're a little bit more flexible.
[00:08:28] They don't teach their kids about tax yet.
[00:08:31] You know, so the kids are just learning to add. And so they're, you know, seeing $3, and then they're adding $2, and then they say they have $5, and so they'll give their $5 to the parent, and the parent actually purchases it because it was maybe $3.49.
[00:08:49] And so they actually are over once you add the 49 cents and the. And the tax. So that's, you know, each. Each family has a little bit of a different leeway there, but overall, the mom is not agreeing to pay for extra. She is just, you know, helping them slowly learn all of those pieces. And one of the most amazing things that I see these kids do, and especially at the beginning they struggle with so much, is $5.99. That's six bucks. We all know that's six bucks. It is so hard for a kid to understand. 5. 99 is 6 bucks.
[00:09:26] All right, there is that sweet spot. But if Your kid is 7, 8, 9, 10, they absolutely need firmer rules, regardless of how long ago you started them, because they are learning math, they are learning, you know, different boundaries, and they are old enough. They really are old enough.
[00:09:43] And then, you know, some families have a little bit of a different guideline. I noticed some of them, I ring up each child separately, and each child gives me their money separately. And I love those moments when I can be really patient and they can count out the money and they can really, you know, think about the math. And it is really a beautiful thing. And it's not great in stores, you know, or moments when the store is busier. Usually the parents will coordinate the checkout when no one else is around. And so then they'll say, okay, now we're done. We're going to go to the checkout, because there aren't a bunch of other people checking out because they know this is going to take a little bit more time.
[00:10:21] Okay, so once you get this figured out, you figure out the guidelines and the rules, and there's tons of resources out there for doing that. I am focusing today on the behavior of the children.
[00:10:33] So now I would also say that the more of a budget the parent has, the more they should do this. So if you are on a tight budget yourself, you. You're going to be in a better place to give money to your child and know that's it. I'm not giving them any other money. I'm not buying them anything at the store, and I don't have to feel guilt about it. Their budget, their allowance each week. I mean, I have one mom, she gives her kid, like, $3 a week, and that's their budget. They just get three bucks, and they can buy toys or they can save it, and that's it. They get three bucks. And a lot of you might think, well, what can you buy with three bucks? Well, maybe you can't. And do you get to buy a toy every week? Like, if your budget's small, your budget's small.
[00:11:17] So I'm not saying that these kids get lots of money. I'm not saying that they have large budgets.
[00:11:22] You know, they are actually just getting very small amounts and learning how to be broke and learning how to have patience when they spend money. And they're learning how to evaluate a purchase and decide, is this something that I really, truly want, that I'm gonna wait for this, and that I'm gonna care about this thing enough that I'm not going to, you know, spend my money on something just to spend it.
[00:11:51] Children with money, I find, tend to be better behaved in the store. They are more thoughtful with their decisions, and they learn now after time, they learn to not purchase something just to purchase it.
[00:12:07] And they also become kind of frugal or stingy over time.
[00:12:13] I actually got the wonderful experience of watching a mom with her two children that started the program. So, like, I saw her children before, and then I saw her children after. And that was fascinating to see the change in behavior of these children and how they had to suddenly learn. And they were. They were so broke at the beginning, and then they would protest about the prices. To me, they knew they couldn't protest. Their mom. Their mom told them, you can buy whatever you want. I don't. You could spend your money on whatever you want. So now they came up to me and they said, why is there nothing for a dollar?
[00:12:49] And it was really quite enjoyable. It was really.
[00:12:53] It was really fun to watch them. But what has happened is the. The boy especially, he's older. He's so stingy. He has absolutely no interest in buying things that he does not find value in. And it took a while to get there. But it has been so fun seeing that journey.
[00:13:10] Now, for kids not having their own budget, they will learn to get a thing they want by begging, by throwing a fit, by bullying, by being a monster.
[00:13:24] How many times have you heard or said one thing?
[00:13:29] So they're not learning the value of an item.
[00:13:33] So if they have money and they learn, they're going to learn that they can divide that money up over other items. Maybe they could get two smaller items instead of one larger item.
[00:13:45] They don't learn any kind of patience. They don't learn, you know, they just learn immediate satisfaction, immediate gratification. They don't learn that maybe if you really want something, you have to wait for it and you have to think about it and you have to want it for more than just one moment in time. The challenge with kids that just have their parents buy something every time they go into the store is that those kids tend to, you could come back the next day and they'd want something else. Where kids with their own money start to think about the value of that item and they have to take their own budget into account and they have to really be thoughtful about the work that goes into waiting to get that money.
[00:14:27] I would say some of these families, they just give their children a budget regardless. Chores are not attached to this.
[00:14:34] Some families, maybe chores are attached to it.
[00:14:37] So a lot of these families, they just get the money every week. It's just part of what they do. And so in that way, the parent is now budgeting those unexpected expenses from their child.
[00:14:52] I find most of the families agree to allow the children to, that they will buy, like the kids, gifts for the friends.
[00:15:02] I find that the parents still, you know, do those expenses. The parents also still pay for, you know, fees for, you know, a sporting thing or for music lessons, whatever that may be. This is just like those extra purchases that the child wants when they go to the store. Now the parent no longer makes any of those purchases. The parent will buy them a birthday gift. You know, thinking of those types of things where, you know, your parent might help you with your college education, you know, but they're not going to buy you the new cool pair of jeans, something like that. I hope that you can see where giving kids money at a young and early age can be crazy valuable for them and can be really helpful for them in learning better behavior, better money habits, and being better financial citizens in our world. And I appreciate you so much. Thanks for listening. And if you loved it, please give me a review, share it with a friend, or jump on my social media and engage with my posts. I appreciate you. Thank you for joining me this week on the Small Business Hustle. I would love to hear your feedback so I can better serve you. And don't forget to subscribe so you can catch me next week where we'll continue to talk about small business.
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