A Money Lesson For Me and My Niece

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Shannon Ryan at The Heavy Purse had a great article this week on how to talk to your kids about debt within the context of everyday life. You can read it for yourself here: How to Integrate Debt Conversations into Everyday Activities.

I really liked her post for its practicality and simplicity. There’s nothing in there about hammering home the dangers of debt with long lectures or powerful examples. Rather, it emphasizes the power of using simple, consistent examples in your daily life to slowly but surely ingrain a respect for money in your children. This post really resonated with me because it epitomizes how I would like to teach my children about money when the time is right, and also because of a recent experience I had where I got to do a little bit of teaching to my niece.

Sending a consistent message

As I mentioned the other day, my 6-year-old niece stayed with us for the past couple of weeks. On the very first day, I took her and my son to Target with me to get some groceries. She had $2 that she had earned recently and she brought it with her to see what she could buy. On the way over she was asking me what I thought she might be able to afford, and I told her that it would probably be something small but that if she wanted to hold on to the money, she could potentially come back later when she had more to buy something bigger. Her response to that: “Nah! I think I’ll just get something now.”

So we got to Target and we ended up walking up and down the aisles of the toy section. One of the very first things she found was a yo-yo that cost about $1.50. “Ooh! I’m gonna get a yo-yo!” was her immediate response. I suggested that we keep looking a little more and that we could always come back to the yo-yo, so we marched on. In every aisle she found something she liked and asked me how much it was. When the answer was more than $2, which it always was, her first response was shock and disappointment. Every single time this happened I would agree with her that Toy X was extremely cool and reiterated the idea of saving her money so that she could buy it later. And her response to this every single time was: “I’m just gonna get the yo-yo”.

After about 10 minutes of looking through pretty much every toy they had, almost none of which she could afford with her $2, she ended up getting the yo-yo. Although I was proud that I hadn’t caved and helped her buy something bigger, I was somewhat disappointed that my message about saving hadn’t hit home.

It turns out that kids actually DO listen

Later that day we went to a birthday party for the son of my wife’s friend. There were a lot of other kids there and the parents set up a scavenger hunt. Our niece found one of the plastic golf balls that they had hidden, and inside it was $5. She was rich! So we asked her what she wants to do with the $5 and you know what she said? She said she was going to save it so that she could eventually buy one of the dolls she saw at Target that cost $15. VICTORY!!!! I honestly felt like jumping up and down and pumping my fists like I had just won the Super Bowl. Instead I simply told her that I thought that was a great idea and offered to hold onto the money while she went back to playing with the other kids. But inside, I felt like a million bucks.

I honestly don’t know whether she actually will wait until she saves enough money to buy that specific doll. Maybe she’ll save her money to buy something else. Maybe she’ll blow it on candy in the airport on her way back home. But she hasn’t spent the money yet and she has brought up her plan a couple more times, so I’m still feeling pretty good.


The point here is that it doesn’t necessarily require moving heaven and earth to teach our children about money. There were no long lectures about compound interest or delayed gratification involved in this example. There was instead a simple, consistent message that was repeated within the context of a situation that actually mattered to my niece. I think the message worked primarily because she was deciding how to spend her own money on something that she actually valued, which in this case was a toy. And because she was in the end still allowed to make her own decision, she was able to clearly see the consequences of that decision and think about how she might want to do it differently next time.

While I’ve already given some thought to how I’d like to teach my own children about money, my son is too young to learn so this was my first real chance to try it out. It was a valuable learning experience for me and I hope that I can use some of the strategies I learned here when the time comes with my own kids.

Other articles I think you’ll like

Edward Antrobus: I wish I had written this article. Edward runs through 6 simple ways to instill your children with a quality education. This is timeless advice.

Planting Our Pennies: If you’re a young investor, this is an absolute must-read article on why market dips are actually good for you.

Student Loan Sherpa: Oregon is proposing a really radical and very cool way to address the student loan dilemma. The proposal would allow students to attend school at no cost, but require them to give 3% of their income back to the University for the first 24 years of employment. I would love to see how this plan worked in action.

Young Adult Money: Renter’s insurance is an important part of financial security that is often overlooked. David explains here why we should want it and reminds us that it is extremely affordable.

Faithful With a Few: Some really practical, actionable tips on how to make the most out of being turned down for a job. Knowing how to learn from past failures is one of the best ways to ensure future success.

The Chicago Financial Planner: A great example of how financial products are often sold with promises that often aren’t all that they seem to be.

The Umbrella Treasury: J.W. walks through her thought process as she and her husband decide how much home they can afford. I really like how she uses the rule-of-thumb methods as a starting point but adjusts them to her own circumstances.

Luke1428: Brian has some great thoughts here on the power of leading by example.

Thanks to these carnivals for including me along with some other great posts!

Carnival of Financial Independence
Lifestyle Carnival
Money Pros Carnival
Yakezie Carnival
Financial Carnival for Young Adults
Carnival of Retirement
Carnival of Financial Planning

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34 Comments... Read them below or add one of your own
  • Brent Pittman July 12, 2013

    Great story. Kids do listen–even when you’re not talking to them. When my son was potty training, he told me that, “diapers cost money.” He must have picked that up somehow, because we never told him that directly. Gotta be careful what messages you’re giving. Little ears are taking everything in.

    • Matt @ momanddadmoney July 12, 2013

      Oh yeah, it’s already amazing the amount that our son can understand, and he’s only at 15 months. We definitely have to be really careful what we say around him because he’s picking it all up. It’s also pretty cool though to see that he really knows what’s going on around him.

  • one step at a time haha. It is awesome she now knows about delayed gratification, and when she doesn’t play so much with the doll she saved for weeks to get, she’ll be even more careful.

    • Matt @ momanddadmoney July 12, 2013

      Yep, each experience teaches something new. It’s also possible she’ll like the doll even more because she had to wait for it, which maybe just delays wanting to buy the next thing. You never know, but the process is started.

  • DC @ Young Adult Money July 12, 2013

    Thanks for including me! Also really enjoyed that story. I’m honestly horrible with kids, and I think a big part of it is that I have little patience. It looks like patience pays off when it comes to teaching kids about money.

    • Matt @ momanddadmoney July 12, 2013

      Patience is huge with kids, but it’s definitely hard sometimes. It’s going to be a real struggle for me with my own kids to let them figure things out on their own and not jump in with my perspective on “the right” way to do it.

  • cashRebel July 12, 2013

    It’s so fascinating to see how children learn. I guess it just takes a lot of repetition and letting them figure it out for themselves. Now all you have to do is make her want to buy a CD instead of a yo-yo, haha.

    • Matt @ momanddadmoney July 12, 2013

      Haha, one step at a time. Actually my wife did convince her to open up a savings account, which was pretty awesome! She also introduced her to the concept that she didn’t have to spend all of the money at once. Moral of the story: my wife is pretty badass!

  • Alexa Mason July 12, 2013

    I really enjoyed that story. That’s so sweet. Kids that age are inpatient, it’s just their nature. But by her even thinking about saving the money to buy the doll is a big step. You did rub off on her, you should be proud 🙂

    • Matt @ momanddadmoney July 12, 2013

      Yeah I’m pretty happy about it, even if she doesn’t end up following through. I think it’s just important to give kids options that they can choose from. As long as she knows the option is out there, she has the chance to use it in the future.

  • Brian @ Luke1428 July 12, 2013

    That’s a great story Matt! I’ve had similar frustrations/victories with my own kids regarding saving. It’s cool when they finally get it. I appreciate the link to my article as well. Have a great weekend!

    • Matt @ momanddadmoney July 12, 2013

      It’s definitely a great feeling when you see something like that seep in. Makes you a proud papa. Hope you enjoy your weekend as well!

  • Jacob @ MPFJ July 12, 2013

    Thanks so much for the mention!

  • Budget & the Beach July 12, 2013

    Good job!!! To add to that, I wonder if kids could grasp interest, meaning that the more she hung on to the money, you give her an extra $1 for earned interest. Planting the seed for retirement! 🙂

    • Matt @ momanddadmoney July 12, 2013

      Ooh, now you’re getting advanced! That’s definitely something I plan to do with my own kids. Even before they have enough money to truly invest, I’ll let them pick different “investments” and have their balances rise and fall with the markets. Should be interesting to see how they react. That’s a little ways off for me though.

  • Done by Forty July 12, 2013

    I especially like your point about making a point in the context of a situation that’s important to your listener. I’m bad at this: I speak from my point of view and my goals. Doing what you describe is more effective, but it requires attentive listening, another thing I am bad at. 🙂

    • Matt @ momanddadmoney July 12, 2013

      I tend to come at things from my own perspective too. I do think doing it from her perspective was critical, but it was more by accident than by design. But it’s definitely a good lesson to learn, hopefully one I can apply going forward.

  • John S @ Frugal Rules July 12, 2013

    Nice story Matt! It just goes to show us again that kids learn from us all the time, even in simple things like this. That can be so humbling knowing that they’re always watching us for lessons like this, but it is also very rewarding.

    • Matt @ momanddadmoney July 12, 2013

      It is pretty amazing to think about the impact we can have. As I said in another reply as well, my 15 month old son already understands so much and it’s really starting to show now. It’s very cool, but at the same time definitely makes me even more aware of how I’m behaving around him. I want to make sure I’m sending the right messages.

  • Shannon Ryan July 12, 2013

    Thanks for sharing my post, Matt. I really appreciate. I love your story with your niece. I feel like a million dollars every time I see my girls make a smart money decision too. It takes time and consistency but they do catch on quickly. You’re a great Uncle and Dad, Matt! Have a great weekend. 🙂

    • Matt @ momanddadmoney July 12, 2013

      Thanks for the kind words Shannon! It definitely helps to have so many people in the PF world with kids, such as yourself, and to learn from their experiences. It’s made me more aware of how my decisions can make an impact, which hopefully is for my own kids’ benefit.

  • AvgJoeMoney July 12, 2013

    You didn’t tell her to put the money into an Ultrashort ETF so she could triple her money over a short period of time? What kind of uncle are you?

    • Matt @ momanddadmoney July 12, 2013

      Haha! I can’t believe I missed that opportunity! I really need to get her in touch with someone on Wall St. so she can learn how to make the big bucks.

  • E.M. July 12, 2013

    Aw, this was a really cute story. I would definitely be proud of her! It’s really cool how she took what you said into consideration. You’ll have to update us on what she ended up doing with the money!

    • Matt @ momanddadmoney July 13, 2013

      Hopefully I’ll find out what she actually does. Not sure though since she lives down in Florida. I’ll let you know if I do for sure.

  • femmefrugality July 12, 2013

    Ahhh! That’s so awesome! I hope she sticks with it…she’s already a third of the way there! I wonder if a visual would help…like one of those thermometers fundraisers use or something.

    • Matt @ momanddadmoney July 13, 2013

      A visual is a good idea. My wife actually convinced her to open a savings account with a site called SmartyPig, which does have a visual component. We’ll see if it sticks!

  • Edward - Entry Level Dilemma July 13, 2013

    Great job on starting her on the path to financial literacy.

  • I think those are big lessons for a 6-year-old, so you’re definitely planting seeds for some big ideas down the line. She’s lucky to have family like you guys. =)

  • Suburban Finance July 13, 2013

    That’s great progress! Kids really do have great memories. I hope that it sticks with her!

    • Matt @ momanddadmoney July 15, 2013

      They definitely remember a lot more than you sometimes think. And even if it doesn’t exactly stick this time, the seed has been planted for the future.

  • 2-copper-coins.com November 23, 2013

    That’s a phenomenal example of a child listening. I watch three boys all the time and together with their parents we try and figure out how to implement some of these lessons. It’s actually been easier with the younger two than the oldest (12) who sees money as means for social interaction and doesn’t give much thought to delayed gratification.

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