How to Teach Kids About Money, Saving & Investing: Lesson 3

Teaching Kids About Debt

One day at the checkout counter my son had forgotten his wallet and desperately wanted to buy some of the candy in front of him. In the past, I’ve always said “no, you need to remember to bring your own money to buy anything you want,” as a way of reinforcing the importance of remembering to bring his wallet to the store. However, I’d been waiting to teach him the lesson of debt and now he was particularly insistent on me lending him some money.

A Practical Approach

I chose this moment to begin teaching him about debt. So before I paid for anything I made the terms clear and repeated them so he clearly understood. Now if you have older children you might want to consider writing them down or better yet have your child write down the terms in their handwriting. It is extremely hard to disagree with something you wrote yourself. (just ask any blogger 😉)

Since my son was so young I just decided to repeat the terms a few times in the car on the way home and later on in the week so that it was reinforced his mind and he didn’t forget. The terms I set were as follows: I will buy that __blank__ thing for you now. You’ll have to repay me with EIGHT chores (or eight times the cost of the things you want to buy.) Thinking he would say no way the price is way too steep, he wanted it so bad, that he actually agreed.

On My Terms

I said, “okay, however, you have to do the chores without any complaining and you have to do them very well, to the satisfaction of my inspection, and you have to do them any time that I ask you, without hesitation, with a good attitude, and no complaining.” He wanted a bag of candy so bad he still nodded in agreement. We shook hands to make it official.

I waited and later on when my son was comfortable on the couch in front of the TV on the coldest day of the year (keep in mind I live in the sunny south so this was still above freezing) I asked him to go wash my car and reminded him of the deal that we had made and that any member of the “Refined family” always keeps their word, no matter what, no matter when, no matter why. We have a lot of family mottos in this house.

Only a little while later he came inside exhausted and miserable and said “I’m done!” I went outside and looked at his work he’d missed the entire back end of the car. I said, “No you’re not. keep washing, keep scrubbing, and make that car shine.”

A few minutes later he came back in and said “Okay, now I’m done.”

I inspected his work said, “No you’ve missed a few spots make sure you get this car sparkling clean.”

With tears welling up in his eyes, miserable from washing this car on a cold and overcast day, I knew that I had another teachable moment on my hands. I knew that if I didn’t intervene he was about to crack.

Teachable Moments are Worth a Thousand Lectures

Before he burst into tears I got down on one knee, I looked him in the eyes and said, “How you feel right now about having to pay your debt when you don’t want to, is exactly how I feel about paying the debt that I don’t want to.

I turned his shoulders around until he was facing our house. I pointed at the house said, “Son, that house is the only thing that owe a debt on. I feel about paying the debt on the house just like you feel about having to finish washing his car right now.”

“There are times that I don’t want to have to get off the couch and go to work but I know that I have to go. even when I don’t want to because I owe somebody else money on that house. I have to go even when it’s the last I want to do. Even when the last and I want to leave you and your sister and march into work
…just so I can give all that time,
…for a little money,
…to give to someone else,
…to pay off that house.”

“Your done,” I said.

“Now, was that one bag of candy worth it?” I said trying to enforce the lesson of debt.

He didn’t even answer. It took all his energy to choke back the tears.

Words weren’t needed. He huge his arms and drug himself back into the house.

Later that year my daughter asked the same question in the checkout aisle as she held up a pack of gum. “Dad will you by this for me? I’ll pay you back.” My son stepped in between us, took it from her hand, and holding it above his head he walked it back to the rack that it came from and set it back in the box. He turned back toward her and said, “No, you don’t want to do that, TRUST ME!“

Keep the FIRE burning my friends.