How do I teach my kids how to budget? – Ask Dr. Leman 164 (Episode 351)

It’s time for another Ask Dr. Leman: “How do I teach my kids how to budget?” Listen in to find out Dr. Leman’s response on this episode of Have a New Kid by Friday Podcast.

 

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Show Sponsored by Revell, a division of Baker Publishing

Produced by Unmutable

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Transcript

Doug:
But I want it and I want it now. Well, little Timmy, we’ve set up a system for you to be able to know the value of money called a budget. But I don’t care. Here’s the question that Rachel asks, can you teach kids to live on a budget? Is it a good idea? Is it a bad idea? Well, Rachel, we get to ask that question to Dr. Leman for you.

Doug:
Hi, I’m Doug Terpening.

Andrea:
And I’m Andrea.

Doug:
And we are so glad that you are joining us today. And if this happens to be your first time, I want to let you know this is for your education and entertainment purposes only. If the subject matter raises any concerns for you or your child, please go seek a local professional for help. Well, let’s jump into Rachel’s questions, but before we do that, I want to let everybody know you can go to birthorderguide.com/podcastquestion, and you can leave your own audio question here like Rachel, but let’s hear what Rachel has to ask.

Rachel:
Hi, this is Rachel Beth from Kansas City with a question on foster parenting. When we foster teenagers and preteens, we’re working on differentiation, authority, and bonding all at the same time. That can be tumultuous. My question today is about helping a preteen or teen learn to budget. Of course, this is their money. They’ve earned it, but they haven’t had the years with us to learn how to budget appropriately from the time that they were young. I have had some foster parents say that they demand that a child, a foster child take half of their paycheck and put it into savings. And the other half they can spend however they wish. I have worked with my foster children on setting up a budget. We use the app, Good Budget. They allocate different amounts into different envelopes, and I get them set up for success.

Rachel:
Although, what I find is very rarely do they follow through on that. Since this is a foster child, not a biological child that has had it for their whole life, what are some practical ways that my husband and I can help our foster children learn how to manage money? It has worked very well, but in general, we’re really not seeing a lot of saving going on.

Dr. Leman:
Number one, if I believed in giving people stars, I would give you five stars for your effort. Getting kids on a budget is a chore and a half. Kids are very hedonistic. They think in the short term, they don’t think in the long term. And so to get a kid, your own child, to start budgeting or get to get your wife or your husband to do so is not the easiest thing in the world. So again, you get the five stars there.

Dr. Leman:
What you’re taking on, especially with kids that you foster, where the kids are with you for a relatively short period of time of their life. You’re fighting the 11 years before they came to you, the 14 years before they came to you with any kind of thing that you try to implement. They haven’t had structure in their life. They haven’t had good instruction in their life. Most of them have not come from healthy homes. So you’re dealing with people who are, been behind the eight ball and bounced around a lot. And so why would they trust a foster parent about anything, let alone budgeting?

Dr. Leman:
But when you asked for a practical step of how to get foster children to budget, I would say two things. They have their check. And just like your friend who said, “Okay, half of it goes here half, you can do whatever you want with it.” That’s not a terrible, bad idea, but it doesn’t get to your point that you want to teach kids to budget. So if that were my foster child and I was interested in teaching them the rewards of saving, what I would do, even as a foster parent, I would match whatever they save that month.

Dr. Leman:
In fact, as a parent, my kids all worked at a camp, a Christian camp in Western New York. And they work like dogs. They start off as what they call dish rags, where they’re the kitchen help and they clean up the floors and they clean the bathrooms and that kind of stuff. And they’re paid pennies rather than dollars. They don’t get a lot of money for their hard work. And they would bring me their paycheck to cash. So they had some money and I was the bank. I cashed it for them, but whatever their paycheck was, I put it in an account that they didn’t know about. And in fact, I matched it some months and weeks, so they could see visibly the result of saving money. It’s one thing to talk to kids about saving money. It’s another thing to show them that you have several hundred dollars in this account and they go, “Where did that come from?” “Honey, when you gave me a check, I put them in a special account. I was essentially saving the money for you.”

Dr. Leman:
So my thinking was, they’re working their tail off in a very wholesome activity for the summer. They’re not getting many bucks for it. So I’m going to bless them as their dad, and I’m going to teach them the value of saving money. So again, my simple suggestion to you would be number one, when they blow their money, that is your foster children, they know they’re out of money. So life is going to teach them a lot of what you want to teach them. But if they will take a portion and save it, I would match that. I would encourage that. Now that costs you money. I mean, it comes out of your budget, but you’re asking a question and I’m doing my best to answer it. That’s what I would do.

Doug:
So if we’re saving, you would say at the end of the month, if the kid has got an extra 50 bucks in their account, how would she know that they’ve got 50 bucks in there?

Dr. Leman:
I would tell her. “Oh, you put in how much? You’re putting $20 away this month? That’s great. I’ll tell you what, I’m going to match that 20 and next week or next month when you get your check, same thing. So, if you want to put 50 in, I’m going to match it 50. It’s your money. Not mine. It’s your account. You can go get it tomorrow if you want. But as long as you’ll put that in every month, I’ll match it.”

Andrea:
How do you know they’re not just going to dip into it and go spend it and be like, “Ha-ha. I tricked them.”

Dr. Leman:
You don’t. At the second month, let’s say they gave you 20 the first month. And they took you up on the offer of 50. Now they put $70 away. You have matched it. You put $70 away. If my math is correct that kid’s got $140. So she goes down to the local bank and she was draws $130 leaving $10 in the account. Okay? So she’s got 130 bucks. It’s her money, but guess what? Next month, she’s got $10 in her account. That’s all. You see, the problem? Life is going to teach her or him when they go outside of these rules, and they are rules of life, there’s going to be a consequence. So it’s a teachable moment. The foster kids, I’ve been a keynote speaker for Parents Anonymous, and I’ve done work for foster associations as well. And that’s a tough world those kids come from.

Doug:
So what about those that don’t have the foster kid element that this, again, kudos to Rachel for all she’s doing. I’m so impressed. What about the rest of us? If we’re trying to teach our kids beyond just saving, but actually realizing, this costs 100 bucks and this cost 50 bucks and we want them to see it, whether she talked about the envelope system that she’s using or some other thing.

Dr. Leman:
Yeah. And a lot of parents use that little envelope thing. Well, I in full disclosure, Doug, only on occasion, have I ever written down a check in my personal account. I went to carbon copy checkbooks. And again, we’re talking to young parents today and they’re saying, “Checkbooks, what’s a checkbook? You old guy, you.” Well, I still write checks, but my nature was, I had what they call a credit reserve or something like that. So on my checking account, if I was over, the bank would essentially loan me the money and I’d have to pay it back the next month. And yeah, they charge a low interest. So I am, in full disclosure, I’ve never been a budgeter myself. My sister would write down every check in granite. So you have to keep in mind, parent, that all these kids come to you, whether they’re biological or foster kids, they come to you with different inner workings. They’re going to see life differently.

Dr. Leman:
Now we, as a parent, we say, “All right, now hear this. This is what we’re going to do in our family.” Good luck because you’re talking to three kids or four kids who are going to see it completely different. And some kids are going to be like the Kevin Lemans of the world and aren’t going to write down the checks. So I’m not a budgeter. I’ve never been a budgeter, never intend to be a budgeter. I don’t value budgeting, I think, would be a fair assumption. I marvel at people who can budget. I marvel at people who can fix things. I can’t fix anything. I don’t have a handyman bone in my body, but I can talk my way into Disney World for nine free tickets. So realize we all have skills. And the problem for parents is that we sort of see things many times in lockstep manner that if you’re a member of the Terpenings, this is what the Terpenings do.

Dr. Leman:
Well, I got news for you. You got four Terpenings, and each one of those little Terpenings going to see life different. And you find that out early in life. Some kids go to bed like a dream. Other kids go to bed like a salmon on a dock. It’s a fight to the finish. So is there an art of parenting? Yeah, I think there is. But part of it is understanding who you are as a parent and trying to be a good listener, treat your kids differently. And these things that we get hung up on, whether it’s budgeting or whatever, in a big picture of things, doesn’t influence to a great degree who your child is. I think that’s what I would tell parents.

Doug:
Well, when we come back, I want to ask the question though, if I hold that as a high value that I actually think it is important for them, how do I deal with that? But I’ll forget this. So thank you, Andrea, for reminding me. There’s great book right now. It’s called Planet Middle School for $1.99 between now and the end of February of 2021, wherever eBooks are sold. And Andrea has an Amazon review.

Andrea:
Yes. Amanda says this book is full of practical advice that you’ll be able to use quickly. If you’re a parent of a middle school student, odds are that you’ll be using advice found in this book within 12 hours of reading. It’s not wishy-washy like some parenting books are, it gets right down to the nitty gritty and gives you concrete solutions that leave your child feeling respected while you can retain your authority as a parent.

Doug:
So if you have kids that are in those middle school years, highly, highly, highly recommended for only $1.99. And now a no nonsense parenting moment from Dr. Kevin Leman.

Dr. Leman:
Hey parents, I’m going to ask you to do something really simple. Just stand up and be the parent you need to be. I’m walking through a grocery store. There’s a four year old in a cart with a young mommy. And every time the cart stopped, the child began to point. “I want that. I want that.” “Oh no, honey, this is what …” “No, I want that.” A little fussing, and before long what mom didn’t want, she said she didn’t want it, is in the cart. For the life of me, parent, every kid needs vitamin N, which is no. If you don’t assume your authority, your child is going to steal it from you. And you’re going to create a little brat to put it bluntly. There’s a reason people look at you sometimes in the store. Believe me, they’re shaking their head saying, “I cannot believe that mother who is an authority over whom?” Don’t ever forget it. You are in authority over your children, not as authoritarian, but you are in healthy authority. Utilize it. It’s free.

Doug:
So Dr. Leman, let’s say that in our family, we think budgeting is like one of the core values you need to know as an adult. And we have that kid like you who’s like, “Budgeting? What’s a budget? I don’t know what that is.” How do we solve that tension when we think money is a big … Is one of those things that causes lots of friction in life. They need to know how to control it.

Dr. Leman:
Yeah. I can answer that question. I’ll remind people that money is important. It’s mentioned 109 times in the Bible. This comes right out of one of the Leman books. I wish I could tell you which one, but I can’t. But it’s like having a puppy. You start training a puppy when they’re a puppy, you don’t wait too long. So by age five, you start an allowance for a child. Every child gets an allowance. To define that allowance, I would say it’s a small portion of the recreational budget of the family. Okay. You might give a five-year-old a couple of dollars in quarters for an allowance. You would increase it every year. When kids get to a seventh grade, for example, that would be increased a lot. When they get to fourth grade, they’re obviously going to get more money than they were in kindergarten.

Dr. Leman:
And they get the high school, I love giving high schoolers up budget for clothes. I think you put money in a child’s hands at 14 and say, “Okay, this is the money we’ve allocated for school clothes. Now you go and you go shopping. If you want me to come with you, I’d be glad to, but that’s your choice.” A kid will figure out if, “I buy this X brand, I only have enough to get one shirt. But if I buy this brand, I can get two shirts and a pair of pants as well.” Let them figure it out. So what I’m saying is your allowance is your best friend when kids are young and they say, “I want this. I want that.” You just simply say, “Honey, use your allowance.” Now, if you want to, if you want to have a savings plan, my two grandchildren who are 15 and 17, both have their own debit cards.

Dr. Leman:
The parents have done a good job in instructing them about financial things. One of them is really sort of tight. In fact, I’d say she’s cheap. If she can find a way to get somebody else to spend their money, she loves to hold onto her money. Isn’t it interesting how kids are? One kid’s a spender and the other kid’s not, but again, they’ll figure that out. The important thing is if you’re going to do this, if that’s a value then putting allowance system at age five and handle it as judiciously as you can. Try to stay out of the way of making decisions for them, because there’s not a better decision than when a kid blows his money on something that was downright half worthless. You know what I’m saying? Let them figure it out their life. They’ll figure it out.

Andrea:
And when would you stop giving an allowance?

Dr. Leman:
It’s a little like asking when do you stop being a parent? Yesterday, to be real practical, I wrote a check for $2,365 for my donation to the Institute for Better Education. In Arizona if you go to a private school, as two of my grandchildren go to, I have four grandchildren, I can donate money in their name and that $2,365 will apply to their tuition. And I get it back on my state income tax. Now, some people are saying, “Boy, I wish we had that in our state.” Well, move to Arizona and you can enjoy that. But the question is, when do you stop being a parent? My daughter said to me yesterday, “Dad, it’s that time of year again, are you willing to put money into Connor and Adeline’s education for next year?”

Dr. Leman:
And I said, “Well, to tell you the truth honey, right now, I’m sort of broke. This is the end of the year. Taxes are due January 15th, but yes, I’ll do that.” And we do it. So when do you stop giving allowances? I think you put kids on allowances through the college years of one kind or another. I mean, here’s a fact for people to think about. I have five kids. I think it was $620,000 I spent on educating four kids through college. That includes everything. That’s a lot of money. That frightened people just to hear that figure today.

Dr. Leman:
Well, if you got kids that are seven or eight years old, do some research, you tell me how much it is to send your kid to … You name the school. The school down the street from where you live, the state university across lines. You’ll be shocked at how much it costs. That’s why they have programs like a 529, I think it’s called IRA where you can save money for your kid’s future education. So don’t, don’t misread what I’m saying. I’m not a budgeter. But I do see the value in people who save money for the future. That’s a smart thing to do for sure. And most Americans don’t save anything, quite frankly.

Doug:
Well, thank you, Dr. Leman. And it makes me think of a story that I worked … My dad owned a laundromat and I cleaned out, maybe I’ve told this to you before, I got the clean out all the quarters that trap underneath the agitators. It took me hours. I had a pocket full of quarters and I biked down to the local arcade and like in an hour and a half, I burned through all the coins. And when I told him, I was like-

Dr. Leman:
Good for you, Doug.

Doug:
I know, but I biked home and I just thought, “I busted my, you know what, for days, and it’s all gone an hour and a half. I’m never doing that again.” So I learned the value of … there’s a level of enjoying and enjoying. So yeah. Okay. Well, Rachel, we just thank you so much for being a foster parent first off.

Dr. Leman:
Kudos for you.

Doug:
Kudos for you. And thank you for leaving the question as well. It’s a great question. Lots of parents are wondering how we can help our kids and we hope this helps all those other parents out there. A reminder, go get the book Planet Middle School for less than $2, $1.99 between now and the end of February of 2021. It will bless you tremendously. And we look forward to the next time we get to add to your parenting toolbox so you can love those kids more and more.

Andrea:
Have a great one. Bye-bye.

Doug:
Take care. Bye-bye.