I Teach My Kids the Value of Money Using the Family Bank Account. It Works.

In a world that is increasingly cashless, my 5- and 7-year-old have a tenuous understanding of what it means to exchange money for goods. I hold my phone next to card readers and tap in a few numbers. I pay bills online. This means that my boys live in a blissful world where everything is, ostensibly, free of charge. And, historically, I haven’t given them many money lectures. It feels weird talking about the sweat of your brow when you spend your day online.

When I was a kid, I was very aware that the roof over my head, the fuel in the car, the groceries, and the electricity coursing through the heavily papered walls all cost something. I watched my parents labor over a checkbook, balancing the ledger with a big-button calculator. I watched them swearing and muttering under their breath while they licked official-looking envelopes.

For my kids? The roof, the lights, the Netflix, the internet, and the cell phone are just part of the fabric of their life. They don’t realize these are things that their parents work to provide. They take them for granted.

It all came to a head recently when they began asking for access to new shows via a media streaming services we did not subscribe to. They were operating under the impression that I could just punch the buttons and Paw Patrol would show up on the television free of charge. This was not the case and I was struggling to understand how to talk to them about the value proposition.

Thinking back to my own childhood, I realized that it might help if they had visibility into overall spending — or at least an awareness of it. There are child development experts who suggest kids should take over tracking and paying one household bill for a few months to better understand household finances. But my kids seem a bit young for that. I opted instead to talk them through our finances for a week. They’d be aware of every penny spent. They’d see the money flow in and out of the bank account. They’d watch the numbers rise and fall.

That was the idea anyway. My first barrier was that the bigger the numbers get for a child, the more abstract and meaningless they become. A kid can understand that ten is more than five. However, they start getting lost in the hundreds. And thousands are largely meaningless. That’s a problem when you have a mortgage.

“Okay, boys. Look,” I said, opening the banking app on my phone. “The first thing you need to know is that we have to pay to have a roof over our head.”

“Just the roof?” asked my 7-year-old skeptically.

“No. The whole house,” I said, moving on quickly. I pointed out how much we had total, in the family bank account.

“We’re rich!” my 7-year-old exclaimed.

“No, actually,” I corrected him. “That’s not really a lot.” I scrolled to the monthly mortgage payment. “See? This is how much we pay for the house every month.”

“That’s like a magillion bajillion fart dollars!” my 5-year-old explained, having apparently done the conversion math in his head.

Things had already gone off the rails two minutes into the effort. I tried another approach in an attempt to recover. To add perspective, I scrolled to the expense of a recent lunch we’d had out as a family at one of their favorite restaurants. I pointed to the small-ish number and compared it to the mortgage number.

“Do you know those crunchy pickles?” my 5-year-old asked. “They are yummy.”

I abandoned the effort and regrouped. I decided what might help is to link the expenses to something they were interested in. But I had to time the lesson so that it arrived before the indulgence. So, I struck where they were most concerned: Netflix. The next day, after the boys came home from school, I stopped them before they could have their daily screen time.

“Okay,” I said. “Do you know that Poppa has to pay for Netflix?”

The children looked at me blankly. Impatient. I opened my banking app and showed them how much we paid for Netflix: $11.73. It was, thankfully, a number they could grasp.

“Now, do you guys think you’d be able to watch Netflix if you had to pay for it?” I asked. “How much money do you guys have?”

The boys began to get a bit worried about this. I asked them to go open their piggy banks and bring me what they had. I heard them rummaging in their bedroom, quarreling softly. Soon they returned with hands full of grubby bills, coins spilling out on the steps as they made their way back into the family room. We counted it up: $9.27. I was relieved.

“So you wouldn’t be able to pay the Netflix bill?” I asked.

The 5-year-old’s eyes got wet. He stuck out his lower lip and started to cry. This made my 7-year-old panic. He began frantically asking me if Netflix was gone and asking if I could give him just a few extra dollars. It took a few minutes to calm them down.

Once everyone was quiet, I explained that I didn’t need them to pay for Netflix. They were doing their kid jobs: getting smarter and stronger through school and play. So I was fine providing them with Netflix. But they had to know that I worked to make sure I could pay for things like meals and TV and the roof (and walls and floor).

With this, I felt they were finally oriented to what I was trying to teach them. And they were more interested and responsive in our ledger reviews. They started to understand that money came in from work and out for goods. This was all I wanted so I felt good about it (not so much about the crying, but tears do happen).

Then, one evening at dinner, my wife asked me why the thermostat was so high. I explained, sheepishly, that I had been cold. And then I took what I saw as an opportunity.

“Do you know why Momma is so upset about the heat being high?” I asked the boys.

“Because we have to pay for the gas for heat,” the 7-year-old said, knowingly. “Everything costs money.”

I smiled. I’d achieved my goal.

“Even money costs money!” he yelled.

And, you know, he’s not wrong. But I’m not explaining debt financing until these kids are out of high school.