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The (Frugal) Nut Doesn’t Fall Far from the Tree

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As I am sitting here bundled up in my mother’s chilly, 63-degree living room, I can’t help but chuckle. It’s easy to think that my quirks and habits just sort of developed on their own, especially since I have lived away from my family for the past ten years. Yet whenever I come to visit once a year or so I see more and more of me in their lives, such as my mother’s attempt to turn the heat off as early in the spring as possible, as well as her efforts to keep it off for as long as possible in the fall/winter. Other quirks that feel remarkably familiar are my mother’s use of the backs of envelopes for list-making and old grocery bags to line her small trash cans, or how my father fills up used water bottles from his faucet to take with him in the car.

During this last trip home I got to thinking about the money quirks we are knowingly and unknowingly passing onto the next generation of Grossmans. What sorts of ideas about money have they absorbed, both good and bad? What basic pieces of information are they missing?

A Lesson in Money Management for the Next Generation

When it comes to money management, one of the biggest sources of frustration that we all must deal with is competing priorities. We must attempt to pay bills and put out fires at the same time as set aside money towards various short term and long term goals. This is the money lesson that I wanted to focus on this trip with my niece and nephew.

On money management--one big source of frustration that we must deal w/ is competing priorities. Click To Tweet

I was ecstatic when I found Money Savvy Pig piggy banks with four different slots for four competing categories: Save, Spend, Donate, and Invest.

I got so excited that I gave these as a gift to my niece and nephew (12 and 6), and took the opportunity to pass on a financial lesson as well. I showed them the four different categories and explained that as they got older and dealt with money more, they would need to deal with competing priorities. Here are some of the things we discussed for each category:

financial lesson with niece and nephew
  • Save: I explained to Rhianna, who has shown interest in getting a weekend job in the next few years, that if she were to save at least 10% of her income from her first paycheck until retirement that she would be a millionaire (imagine her eyes lighting up!). I also explained the importance of not spending your entire paycheck. Then I got both of the kids really excited by explaining to them that when they allow the bank to hold their money, the bank will pay them for it. Wow were they excited about this idea.
  • Spend: In this category I wanted to discuss the need for everyone to spend money on bills each month. I asked them to identify different types of bills that their parents pay each month, and they both came up with groceries and gas. Then I added in a few extra, such as rent/mortgage and electricity.
  • Donate: With this category we talked about how there are always people who are in a worst situation than we are, and that it was important to set aside some money to help them out. We talked about ways the kids could use the coins that they accumulate in this category, such as putting them in the Salvation Army buckets at Christmas or adding the change to a collection plate at church. Rhianna came up with her own idea to purchase gifts at the store to donate to the food bank around the holidays.
  • Invest: I did not want to delve into the logistics of investments, risk assessments, and all of that (a future lesson for sure!). However, I did want the kids to know that this was another category where if they gave their money to a “bank” (keeping it simple), then the bank will pay them money in return. Once again, another highly interesting category for them.

After we had discussed each category, I gave them all of the change I had saved up for the last few weeks so that they could start to populate the different categories on their own. It was great to see how their minds were working while trying to figure out how to divide up their coins among the categories. I also enjoyed listening in as they began to discuss what they wanted to save up for, or how they were going to make lots of money by putting it into their savings accounts (I didn’t have the heart to tell them that current interest rates are abysmal).

niece and nephew with piggy banks

The more I am around kids, the more I see how aware they are of their environment and of the details in their parents’ lives. This means that we are probably all passing on money habits to the next generation without even knowing it. So why not take the time to sit down with your children, nieces/nephews, grandchildren, etc. and teach them some positive frugal and money management habits instead of hoping that they will pick up on the good ones and fearing that they may pick up on the bad ones?

What sorts of money lessons have you had with the next generation of your family?

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Amanda L. Grossman is a Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 10 years, her money work helping people with how to save money and how to manage money has been featured in Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here.

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