“Hey Dad, Does Money Grow On Trees?”

“Hey Dad, does money grow on trees?” “No Trent, it is stuffed inside your iPhone and all you have to do is hit ‘buy now’ and you can buy stuff for the rest of your life.”

In this increasingly electronic world where billions of dollars of transactions are done with the push of a button and now with electronic currency such as bitcoin it is not hard to understand why kids can become disassociated from the relationship between buying things and actually having the money to pay for them.  This is especially true where childrens’ iPhones are linked to their parents’ accounts which gives them the instant ability to buy things with Mom and Dad’s money.  

For many kids there is no longer the need to pull real cash out of a real wallet and hand it to the store clerk.  It all must seem rather unreal – almost magical – to a young person; a step or two removed from playing yet another video game.  But what is the consequence of all of this? What will such easy spending do to our efforts to raise kids who are disciplined savers and disciplined spenders?

As parents, it is our job to put the reality back into our kids’ spending experience by doing the following:
  • make sure your mobile device is synched with your child’s device so that you get an alert every time they make a purchase.  Pay attention to what they are buying and have a clear understanding for who is paying for what.
  • review the bill with them when it comes in so that they can see precisely what their charges were and what they add up to.
  • have them sit with you when you pay the bill whether it be by writing a check and mailing it in or with an electronic funds transfer.  They need to see that “buy now” must be paid for with real money.
  • show them how your account balance decreases every time you pay for their charges.  Talk about what has to be done to replenish the account.
  • establish ground rules for who will be paying for the charges going forward and place a limit on anything you may be paying for.
It is important for kids to see the consequences of clicking the “buy now” button and the only way to do that is to spend some time walking them through the bill paying process.  Money doesn’t grow on trees and the sooner kids realize that the better off they (and their parents) will be.

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