Comment by Quinzel
21 days ago
Great article. I think it’s very true.
I felt I was failed by education/parents with regard to financial literacy, because the first time I ever had real money in my life was when I went to university the first time and I had no idea how to manage it, and I ended up homeless for some time.
Now I’m a parent myself, I decided I’d teach my kids about money by actually giving them money. $100 each per fortnight. I made both kids set up savings accounts that earned interest, and they had to save $50 a fortnight. The other $50 I said they could spend on whatever they liked, but that I would no longer pay for anything related to their gaming (ie, Xbox subscriptions etc), I don’t buy them toys, or nice snacks, or fancy branded clothes - that’s all stuff they now need to save for and buy themselves with the money they are given. One kid has ADHD and the other kid is close to neurotypical. The neurotypical kid certainly learned how to manage money quicker. His savings account remained perfect, he accumulated interest as well, and can always afford his subscriptions etc. he barely ever even spends the $50 that he’s allowed to do anything with, but when he wants to use money when going out with friends etc, he just always has money, and he even keeps some cash on hand as well.
The other kid on the other hand has taken a longer time to understand but, there’s absolutely no way an ADHD kid would learn without real money to manage in my opinion and I think they benefit from having the freedom to make mistakes with money. He would spent his $50 within about 10seconds of receiving it, generally on stupid shit from Amazon. Then he never had money for his gaming subscriptions which would result in massive meltdowns when he couldn’t play his games, and then he never had money to do stuff with friends when he wanted to. He was always the “poor kid”. Then, even though he wasn’t supposed to, he withdrew cash from his savings to pay for subscriptions, losing interest etc, and then also having no savings. It took about a year, but he’s finally learned to stop buying stupid shit on Amazon. He still can’t seem to save the way his brother can, but he saves for a couple of months at a time, and then buys the next computer part he wants, and he always sets aside the money for his game subscriptions now as well. He also does sometimes put extra little bits of money in his savings when he’s particularly motivated for a more expensive piece of computer, but he still often withdraws for stupid small shit. He also compares his spending behaviour to his brothers and he realises that his brother is “rich” because he doesn’t spend money.
It’s an expensive lesson for me to teach them, but, I genuinely think that it has helped them both learn real life lessons with regard to money. I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it. I’m very lucky that I’m in a position to be able to afford to let me kids experiment with $100 each a fortnight. There’s people out there who could probably afford more than that, but I think that in the real world, a large majority of people cannot afford to give their kids that learning opportunity. However, for me, having once been homeless, and then many years later having done an MBA which included finance, I realised the best way to help my own kids learn to manage money was to give them some money to manage.
Would you mind sharing the age of your kids when you started this approach?
Sure. When we started, the younger son was 8 years old and the older son was 10 years old.
At first I did it with cash and they didn’t have bank accounts, but I found the problem was the younger one would “misplace” his savings money all the time. And I also found that the ADHD was sly and would “find” the younger brothers misplaced money and spend it, but in such a way that I couldn’t prove it. So I just went and opened bank accounts for them. Who has cash these days anyway! It’s been much better since.
I do much the same: slightly less but with no rule about saving. Both have learned to handle money reasonably well.
Its fits in with my general approach to parenting and education too - generally encouraging autonomy and making their own choices, "home educated" up to 16 (GCSEs - UK high school exams), managing their time (just as valuable as money).
"I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it"
and their parents have the same problem so cannot teach it either.
That said being rich can make you stupid about money too, as it can lead people to think they have an endless flow, especially if they have indulgent parents.
> That said being rich can make you stupid about money too, as it can lead people to think they have an endless flow, especially if they have indulgent parents.
I agree. It’s difficult to strike the balance right. I definitely don’t think there is a need for me to give my kids more money than they already get. Particularly because they’re sort of lazy when it comes to household chores, especially the neurotypical kid - he’s diabolically lazy. The money I give is independent of “chores”. It’s literally a lesson in an of itself. If I want them to do a job for me, ie, gardening etc, I’ll offer them a similar amount of money to what I’d pay someone else to do it. The $100 a fortnight is basically like my own version of a universal basic income for kids. It hasn’t destroyed their motivation to earn money in other ways, in fact, I think it’s motivated them to want to get good paying jobs etc, so they can have more money.
They’re still relatively young though, so I will be interesting to see how they do once they reach adulthood and have real adult responsibilities and bills to pay etc.
It is beneficial for your kids to have the opportunity to make mistakes with the small amount of money they receive. These lessons learned will save them from future troubles. 50 bucks may not be much, but it’s enough to keep it real.
~$5000 per year, which you would have likely spent anyway just giving them things, in order to hammer in solid financial literacy skills seems like a really good return on investment. Especially for the ADHD one - even if he can't or won't save like his brother I think you are immunizing him against the worst kind of financial ruin in the future.
Yes - I don’t buy them extra things through out the year. I also only top up their bus cards for public transport once every 3 or 4 months (sometimes they use their bus cards to pay for their friends) and if they run out of bus money, then they have to either walk, or top it up with their own money.
The ADHD kid walks.
This is a sobering account. Thank you for sharing.
I’m curious, is the ADHD child receiving treatment? On medication?
I wish more people understood how this goes, when their answer to every social ill is “people need to do better” and there’s no allowance for those who don’t possess the same capacity.
Unfortunately he does not receive the typical ADHD treatment. As he also has a tic disorder (Tourette’s). Standard ADHD medications are contraindicated in people with tic disorders because they exacerbate tics.
This is why some people who have ADHD actually get worse on medication, as they may also have mild cases of Tourette’s that haven’t been identified. Tourette’s and ADHD commonly occur together along with OCD. I call it the ADHD trifecta. My son has behaviours consistent with all three (the most overlapping symptom being impulse control (or also known as compulsive behaviours). It’s a difficult combination of behaviours to manage, and with Tourette’s in particular, it’s not just verbal tics or motor tics, it’s also severe disinhibition (think having no filter), and uncontrollable rage (also because of the lack of filter). So the ADHD medication makes all those behaviours worse.
He instead has off label medications. Clonidine, and a SNRI (I hate that he is on an SNRI, but he’s been on it for 4 years and before he was on it, life was really extremely distressing and hard most of the time so I often remind myself of those times when I feel guilty that he’s been on an SNRI for as long as he has).
So a lot of the management of his ADHD has to be through behavioural approaches since we can’t use medication to help. Hence doing things like this money thing, and him suffering the consequences of his poor money choices.
He’s lucky to have you looking out for him.
This is fantastic and inspiring, thanks for sharing it! I'll definitely share this with my parent friends. There's no better way to learn some stuff aside from it happening to you, all driven by incentives.
Do you boost the interest of their savings account to make more attractive?
When my parents got me a bank account as a kid, the banker explained to me how great compound interest is. Then I asked what my APR is, and she said 0.01% but I still make some money off my $500, then I asked if it's rounded up or down... A few months later, I took out all the money and invested it in my favorite company Apple, though my dad talked me into diversifying it.
I learned as a kid that savings accounts are a scam, and that's still what I think. Even if it's 4% today, that's basically losing wealth each month, and I'm not putting anything more than emergency money in there.
No, because their savings accounts actually have fairly decent interest rates for kids accounts. However, I do give them extra money on birthdays and Christmas. Also, when they do really good things, (ie, achieve something good at school) they always get a cash bonus.
Interestingly, even though the the non-ADHD one does better at saving, he doesn’t understand the concept of interest yet. However, the ADHD one clicked on very quickly to how interest works, and his bank has a policy that if you withdraw from your savings more than once in a month, you lose the interest for that month. So now the older one has started to plan withdrawals around that idea. It’s not the exact lesson I would like him to learn, I’d prefer that he just didn’t withdraw. But I like that he’s coming up with his own strategy to manage his money (and impulse control issues).