Here is a recent exchange I had with my 11-year-old niece via text:
Niece:
Can I borrow $20?
My Cash App is XXXXXX.
If you have the money.
Me:
Hey, did you get the $35 I sent you last week? (She had borrowed money the previous week.)
Niece:
Yes.
Me:
Well, if you pay back the $35, I could give you $20. How does that sound?
Niece:
My mom says she is going to pay back the $35.
Me:
Your mom or you?
OK, as soon as I get that money from your mom, I will be able to lend you $20.
I never received the initial $35 nor did I lend $20 more.
When talking with my young nieces and nephews about money, I always try to offer up advice in a non-preachy way that is age appropriate and keeps them from rolling their eyes. The age-appropriate lesson I wanted my niece to take from this exchange is that she needs to repay a loan before borrowing more money. I wanted her to be immediately impacted by her financial decisions, which is what happens in real life. This is how it’s done in the adult world, I tell her. This is how you become fiscally responsible.
Last fall, when my teen-age nephew wanted to borrow money, I told him that our entire family would be out in the yard raking leaves on Saturday. Come over, pitch in and I will pay you for your work. The lesson here is that you can earn money to buy the things you want. What’s funny is that, while standing in our yard helping us rake leaves, he actually asked me and my husband: “Why don’t you guys just hire someone to do this?” Um, we just did.
When another nephew was riding around with his friends one Friday night and stopped by to ask for money, I gave him $100 that I have not seen since. He later would learn about the importance of repaying a loan when he needed additional cash (see my 6 rules for lending money).
In our household, where my husband and I are raising a 13-year-old son, we work hard to model financial responsibility. Sure, I am a bit of a financial geek tossing around phrases like “opportunity costs” and “FIFO,” but I try to explain them in ways my teen can understand.
Here are a few of our favorite lessons from our household:
Wait, wait, we need to FIFO the apples before we start on the newly purchased oranges. (For those inventory accounting junkies—yup, we exist—FIFO means first in, first out. In other words, use up what you have before moving onto newer items.)
Wait, don’t toss that out, that’s 18 cents worth of milk in that cereal bowl.
Do you have “eating out” money?
Hello, is anyone going to eat these leftovers before they go to waste?
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