Thursday, January 17, 2008

Money From the Wall: Child's View of ATMs & Credit Cards

Money doesn't grow on trees, it comes out of a wall. That's how one child explained finance to his parents, who are friends of mine. Savvy about money, my friends were a bit alarmed about their 9-year-old son's view of money. During a recent car ride, the father told me how he's trying to give his son small doses of fiscal reality.

The Scenario: The wake-up call rang when the 9-year-old proudly announced that he wasn't going to work for a living.

Father: Why not?

Son: I'm going to get one of those plastic cards that you have. When I need something, I'm just going to use the plastic card and sign my name.

The Aftermath: The father, who works in the finance industry, reviewed his shopping and spending transactions. He realized that his son -- an elementary school student -- had closely watched his parents make purchases at restaurants, stores and other locations. From a child's view, the transactions seemed simple: Show the plastic card and receive stuff for free. Why work for money when you have a plastic card?

The Solution: When the next credit-card bill arrived, the father opened the bill with his nine-year-old. Here's their step-by-step financial lesson:
  • The Account Numbers: The father pulled out the family credit card and asked his son to find the numbers on the plastic card. To make the connection between the credit-card statement and the plastic card, he asked the child to match the numbers on the plastic bill with the account numbers on the bill.

  • The Balance Check: The father showed the 9-year-old the monthly credit-card balance. Well-schooled in math, the child was shocked by the large dollar figure. To drive the point home, the father explained that all of the things that had been purchased with the plastic card had to be paid for each month with real money from the family's bank account.

  • The Bank Lesson: The father explained he wrote checks to pay monthly bills, including the plastic bill. That lesson took a while because the son argued that checks were just paper and he could just sign his own papers to pay for the plastic. Next: The dad tried to explain how the banking system worked.
After listening to a lesson about credit, interest and banking, my friend's child nodded and came up with another solution.

"I'll get another plastic card," he told his father: "I'll get the plastic card that makes money come out of a wall."

I'm sure that the father offered a very thoughtful and detailed explanation about automated teller machines, but our car ride ended before he finished telling the story. Meanwhile, I had a lot to think about anyway. I wondered what kind of unspoken messages about money, spending and family finance that I have delivered to my children.


Previous Posts

Mutiny: Rebellion Against Used Party Clothes: Frugal Event Planning Guide Pt.2

Frugal Lessons from Luxury Shoppers: 3 Basic Questions Before Paying

Fourth Grader Joins Flea Market, Hires 4 Employees, Sells Crafts and Prints Money
Full-Time Teacher, Weekend Cook: Part-Time Jobs To Pay Bills

Sharon Harvey Rosenberg is the author of The Frugal Duchess of South Beach: How to Live Well and Save Money... Anywhere!, which will be published in the Spring of 2008 by DPL Press.


Jacob said...

I think the answer is "a lot". I grew up in one of those primitive European countries where people still pay in cash and consumer loans are for crazy people. One of the things I learned from getting an allowance rather than stuff and having a job is that if you don't have enough money, you can't afford it. Some of my friends did not have jobs or get allowances. Instead they got things by asking their parents. Even much later they were never that good with money.

Chief Family Officer said...

I'm afraid this is going to fall into the category of "I'll make sure that never happens to me" and then a few years later, "I can't believe that happened to me!" Although I really am and will be doing my best to teach my kids about money.