Money plays a huge role in our lives and can affect our relationships and general wellbeing. Teaching kids about spending and saving equips them with the confidence, knowledge, and skills to manage money effectively both now and in the future.
Developing smart spending habits with your kids can be rewarding and fun. So as a new member of the Truman Wealth team, I wanted to share a recent experience teaching my young daughter, Allie, about making smart choices with her money.
All the Financial Fun of the Fair
The Minnesota State Fair comes in second on the list of biggest state fairs in America (after Texas). If this seems surprising, it’s probably because the Minnesota population comes in at 22nd out of 51. Attendance varies but generally runs from over a hundred thousand to a quarter of a million people each of the 12 days the fair runs at the end of summer.
Some of us are repeat fair goers over numerous days. There is too much to see and do, even if you spend an entire day there. Not to mention the food and drink options – every year there are perennial favorites like mini donuts and corn dogs.
The oldest attraction on the fairgrounds is a ride called “Ye Old Mill”. Built in 1915, it was operated by one family for over 100 years. Touted as the “original tunnel of love,” you take a relaxing boat ride in a dark tunnel and see some kitschy vignettes along the way. Allie knew she wanted to ride it. The question was, how many times could she afford?
Learning the Value of a Dollar
When I asked Allie how many times she wanted to ride Ye Old Mill (when we were doing some The night before the fair, Allie and I spent time devising a preliminary plan of our route and budget so we could decide what rides we wanted to go on, and how many times. Allie said She wanted to go on Ye Old Mill between two and five times.
I told her that at $5 per person, or $10 per ride for both of us, mom does not have $50 in Ye Old Mill ride spending money. Especially when I was already bringing several hundred dollars for parking, entrance fees, food and attractions. I helped Allie understand that $50 was a big percentage of the budget for the day, and agreed to pay for us to go twice, but after that it was up to her.
The Basics: Save, Spend, Share
Allie receives an allowance – not connected to chores because those are what you do automatically to maintain where you live – but as a tool for her to learn about money and for me to see where she is in her brain development with how she handles money.
She gets $1 per week per year of age and it’s split; share-save-spend, and her spend jar is for her to decide exactly what she wants to use it for. This is a really simple and effective way to teach kids about spending money by giving them ownership, and a vested interest in how to assert that.
Goal Setting and Opportunity Cost
We planned as much as possible ahead of time to decide the total amount of cash we needed to take with us. Allie chose to take $50 of her own spending money. She bought two small trinkets, and thought about another, but decided not to buy it.
Allie had enough money left over at the end of our day to pay for us both to take 3 rides on Ye Old Mill. It’s a four-minute ride, so she spent her $30 on 12 minutes of ride time together (with one proud mom).
Valuing Experiences Over Stuff
Allie prioritized Ye Old Mill over every other ride, and was so happy with her decision. It was her favorite thing about the fair. We talked about how different her decisions are when she’s spending her own money – how she almost bought a plastic toy horse but realized she didn’t really need it or want it that much in comparison to the one time a year she gets to ride Ye Old Mill.
It makes this mom’s financial planner heart happy to hear that she’s getting the lesson – the purpose of the spend jar portion of her allowance money. I’ve watched her spend that money on all kinds of different things, and I never weigh in on her choices. She’s getting the decision-making process, and I love that she’s choosing experiences as well as things.
Setting a Good Example for Your Kids
My biggest lesson from this year’s Great Minnesota get-together? Start saving my Ye Old Mill ride money now. I will plan on paying for next year because I know she already got the ‘money lesson’ this year – and I learned how much she truly loves the ride. Since it’s the only time of year she can go, it’s worth riding it again and again with her. Someday (sooner than I’m ready) she won’t want to be caught dead on Ye Old Mill with mom!
Part of what makes me excited about what we do at Truman Wealth Advisors is watching people get joy from the spending decisions they make (and helping to facilitate those decisions, just like I did with Allie). Everyone spends money differently and values their time differently, and we at Truman Wealth appreciate being part of the conversation.
If you would like to bring a bit more Minnesota State Fair energy to your money choices, please do get in touch.