Kids and their Money

by Thom Hiatt,

For some parents, what you are about to read may be truly life-changing, inspiring you to chart a new course in your family’s journey. For others, the information and ideas may be less impactful. Either way, please know this information is not presented to you personally. It is not coming from a licensed financial adviser, rather it is from an average dad. And every last bit of it should be consumed for “entertainment” purposes only. 

Keep reading to learn about my financial childhood, or scroll down to see my household financial rules for kids.

I grew up in a low-income household. We were not broke, and we were never hungry, but there weren’t many new or fancy items floating around my house. If clothes weren’t hand-me-downs, they were from K-Mart. If my skateboard broke in half, dad made a new one with plywood. Morning milk had been mixed from powder the night before, and it chilled overnight in the fridge. Vacations were camping. And as a child, I worked for my own income, to save up and buy the things my parents could not or would not buy for me.

My dad is a carpenter. He would hire my brother and me for easy, repetitive jobs. For example, he was once contracted to build wooden cleats that protect water hoses. Each hose needed hundreds of cleats. Each cleat needed two holes, and he paid a penny per hole. Drilling a hole took just a few seconds. We would work quickly, drilling lots of holes and earning lots of pennies. It wasn’t free money. And we earned it.

In our front yard there was a peach tree that produced a lot of fruit. Peaches would fall and rot and leave large seeds which made mowing that spot difficult. So dad paid a penny per seed we picked up. That’s easy money for a 7-year-old in the early 1980s.

I don’t recall ever receiving an allowance of free money each week. But we did have chores around the house. My chores included vacuuming the carpets and dusting the furniture. I enjoyed both chores because I could immediately see the fruits of my labor. Wipe the table and you see the shine. Vacuum the carpet just right and it feels like new. I enjoyed that!

In middle school, I was hired by the school janitor to help clean up after each school day. A team of students would work for one hour. Younger kids earned 50¢ per day and older kids earned $1 per day. I was responsible for sweeping the stairs, cleaning urinals and vacuuming classrooms.

My work ethic was noticed by a woman whose husband owned a number of ball field concession stands. The owner hired me when I was 11 and he paid $2.50 per hour, which was an incredible raise from the school janitor gig. I worked for him for three years, had earned a number of raises, and left the job earning $4.25 per hour. Toward the end of my concession career, I was also in charge of taking cash to a concession stand, unlocking the door, getting all of the food hot and ready, selling all night, cleaning up, locking the door, and taking much more cash home.

I vividly remember saving my money to buy a brand new, baby blue Schwinn BMX bike. It was $209 and I could finally ride (in my imagination) like the superstars in the movie RAD.

During the concession job, at age 13, I also picked up a newspaper delivery route. The publisher would drop off giant bundles of newspapers at my house each Wednesday. I would come home from school, roll papers, slip them into plastic bags, shove them all into my giant canvas shoulder bag, get on my bike, and deliver papers to each home across three neighborhoods. It was a lot of work, and I earned $36 per week.

Having my own money, and being a teen, I fell into fashion, and could finally buy my own clothes that were not from K-Mart. I also bought a stereo system, CD player, and large speakers for my bedroom.

During childhood, I learned to live below my means, spend less than I earned, and save money in the bank. By the time I turned 16, I had enough cash to buy my first vehicle. It was a van with wall-to-wall gray carpet, captain’s chairs, and a really good sound system.

During my sophomore year of high school, I started a mobile DJ company. I made business cards and gave them to everyone. I hung signs around town. And before long I was hired to play at small wedding receptions, pool parties, and even in a country bar… all the while using the stereo system I had bought for myself. With new DJ income, I eventually upgraded and bought professional equipment, and a different van.

Being 16 meant that I was also allowed to work at the stores in the mall. I took on jobs at the movie theater, a music store, a department store, and in an office that sold seamless siding over the phone! I had these jobs, and my DJ business, simultaneously, and would be at the mall almost every single day, working in a different store. On the weekends, I would work at the mall in the morning and play as a DJ at night.

Despite the constant work, I was also a very active high school student. I sold ads for the newspaper, I was on-camera for the morning video announcements, I ran for class president, I participated in the community clean-up club, managed the girls volleyball team, helped with production for a play, voiced the after-school announcements, played on the men’s volleyball team, and so on. It was a wonderful four years of my life.

That summer, thanks to my brother’s collegiate inspiration, he encouraged me to start investing in a retirement account, at just $50 per month, which admittedly felt painful at the time… to invest in something I would not see for 50 years (but now feels like it’s right around the corner!)

When I started college that fall, my DJ business was booming enough that I could drop all the other jobs and focus on school. Mom and dad didn’t know much about scholarships, and so we never applied. Instead, they each contributed $500 per semester, and the rest (tuition, room, board) was up to me. Because of my work and income I was able to pay the balance due each semester (for five years) and I graduated from a nationally-known university without student debt. I sold my DJ business to a competitor, packed up my things, and moved to San Diego in the summer of 1998.

Six years later I married, and by the fall of 2004, we had daughter #1. She’ll be turning 17 this fall and is making plans for her own college journey… all while our youngest daughter just started first grade! The 11-year spread in ages gives us the opportunity to look back on how we’ve raised our kids, and make tweaks to benefit the others.

The Rules

Lately, a few of our parenting methods and household rules (with respect to finances) have seemed interesting to fellow parents of young children, and so I’ve shared them below.

Save half of your money for later in life. The other half goes into your wallet or purse, which you can use to donate to charity, buy gifts for friends, or use toward games, candy, and shopping. The first half that you saved can grow over time (at the bank and with investments). Because you saved, later in life you will have more money to use toward big items like cars, college, a house, and even your retirement!

Rule #1: Save half

When our oldest daughter was very young (and I don’t know when exactly this started) we implemented a new household rule for the kids: “Any money you receive, earn or find, you have to immediately save half in your savings account, and you can’t touch that money until you are 18.”

This meant going to the bank and opening a savings account as soon as each child had a social security card. It also meant that half of Christmas money, half of birthday money, and half of odd-job money, went into savings.

Of course it is painful. Fifty dollars received from Grandma becomes $25 that you put in your pocket. When you are young, it feels like you’ve lost half and will never see it again. No matter how many times I say, “Honey, it’s still your money, it’s adding up in your account, and you will get all of it later,” the kids just didn’t understand until around age 12.

The result? My oldest daughter saved enough by her 16th birthday to buy a used car. She also started her first job at a pizza take-out. While she no longer saves a full 50%, she continues to save $100 per paycheck in her savings account, plus $100 per paycheck toward a new computer, and $50 per paycheck into her retirement account.

Rule #2: Bring your money

When I was a new father, I did not like hearing begging when we were at a store. I didn’t like hearing it from my own child, and I didn’t like hearing it from children in other isles. Even worse, I didn’t like to see other parents cave in to the begging, because where does that ever end? It doesn’t. Caving to begging turns into more begging and the cycle continues.

So, starting when she was old enough to beg, I would simply reply with, “Did you bring your money? You need money to buy that [toy / candy / item] so if you bring your money to the store, you will be able to buy it.”

The begging stopped almost immediately. Today, when we leave the house, all of my kids know to bring their own wallets, and not one of them ever asks (or begs) for something to be bought for them.

If you are wondering where they get their money in the first place, the answer is Christmas + Birthdays + Recycling Bottles & Cans + Miscellaneous Opportunities. When they receive money, they save half, and know they have to retain money to buy their own toys and candy, they make more wise purchases and buy less junk.

Eventually, a young child is at the store and really wants a toy or game they cannot afford. They instantly remember the candy or drink that has since been pee’d away, and regret sets in. Over time, they start to buy fewer costly drinks, and start to save for purchases of items that last for weeks or months, and they take better care of it.

Rule #3: Go to the clerk on your own

When you are at the store with your children, and they are about to buy something, it’s normal to want to stand right next to them. And that’s certainly okay for the first purchase or two. But then it’s time to slowly step away… three feet, six feet, ten feet away.

When my family goes to the store, and a child is buying something, we let them go ahead of us, and we stand back by about 6-10 feet. THEY put the item on the counter. THEY wait for the clerk to scan the item. THEY wait to be asked for money. THEY look in their own wallet for cash. THEY hand over the money, and they wait for change and a receipt. Because it is THEIR money, they double-check the receipt and make sure THEY receive the correct change.

This entire process teaches independence and responsibility. The child takes full ownership of the process and the item. And while they don’t even realize it, they are learning about money, transactions, change, MATH, accuracy, TAXES, manners, jobs, and so on.

The result? For over a decade now, my oldest daughter is able to very quickly plan ahead for her own purchases, calculate the tax in her head before ever arriving at the store, choose the best value from all options available, pay attention to pricing errors, not be afraid of clerks, ask for a manager when necessary, keep her money safely in her wallet, and take better care of the items that she has purchased entirely on her own.

As an added benefit, the young kids’ purchase often turns into conversation in the car, such as, “What do they do with the taxes?” And you get to tell your child about the government, the roads, the police, firefighters, schools, teachers, and water systems.

Rule #4: Save, Spend & Give

We’ve always shared with our kids that there are three things you can do with money: save it, spend it and give it. SAVING it can include a savings account or investments. We’ve told our kids they can SPEND their un-saved money on anything they want as long as it’s legal. And we’ve never discouraged GIVING, whether to the church, to the school, or to a friend (birthday presents, lunch out together, etc.)

During the last year, we’ve watched our oldest daughter working and making a good income. She saves plenty, and also buys her own posters, albums, shoes, makeup, fancy drinks, and snacks. She’s also saving to buy her own computer with total pride. 

Translation: I am not the one paying for posters, albums, shoes, makeup, drinks, snacks and the latest computer.

And she’s quite thoughtful about buying occasional small gifts as surprises for her friends. (Hopefully that will also one day translate into more generosity toward non-profits and movements that she supports.)

Got kids? The time is now.

If you have kids, and especially if you have really young kids, I would suggest that there has never been a better time than now to instill some basic financial management tools in their lives: save half, bring your own money to the store, go to the clerk on your own, and don’t forget to give to others.

The holidays are right around the corner, and another birthday is less than 12 months away. Money may very likely be flowing in, and saving half is an easy new step for them to take. Make it a habit (or requirement) and in no time flat your little toddler may be a “wealthy” teen who can completely manage her/his own financial affairs, and take better care of their belongings.

(If you do go to the bank and set up a new savings account, set it up in their name with their social, and be certain that it is a ZERO-fee account, and you are not paying a monthly fee to keep it open. Oh, and don’t ever take money from it for yourself. Hands off — it’s your kids’ money!)

A quick note about diversification. While I am in no position to encourage you or discourage you or your family to invest money, or how to diversify your money, I do think it is important for every person to understand what the word diversification means. Basically, it helps you to keep from putting all of your eggs in one basket.

Financial education helps much more than the kids.

Two years ago, seven out of ten Americans had less than $1000 in savings, and almost half of Americans had $0 saved up for any purchase or emergency ( It’s noted that financial troubles are “the last straw” for 40% of couples that divorce ( And in America, half of all marriages end in divorce.

Not married? Well, 72% of Americans are stressed about money ( Stress can lead to addiction and substance abuse ( and a generally unhappy/unhealthy life.

If parents are stressed and in financial straits themselves, they are likely not teaching their kids about making better purchasing decisions and how to improve personal finances. And so who is left to teach the kids about money? 

“Our schools should do that,” you say… Great idea, but middle school financial education is often limited to a chapter in a math class, and most high schools have eliminated home economics classes altogether. Gone are the days of students learning to make a budget, pay the bills on time, and how to iron their shirt just right.

“Well, they will learn that in college, right?” You’d think they would, but it’s the opposite. Instead of learning to manage money during the first years of adulthood, college students today are living on loans, while being suckered into high-interest, no-questions-asked credit cards. 

What’s worse is the media supported by advertisers who teach us to throw things away instead of fix them, to buy shiny new items with our multiple credit cards, and make the minimum payment that traps us in years of added debt and stress… So we graduate from college and carry the stress into our brand new marriage and family.

All the more reason to STOP THE TREND and teach financial basics to our very young children, REGARDLESS of our own situation, income, zip code, or family history. As parents we can be in debt up to our eyeballs, but still have every ability to teach a child to save half for later, bring your own money to the store, visit the clerk on your own, and give back to others.