Let them Make Money Mistakes

Written By: Shari Evans, EML, AFC®, MQFP

Kids’ Corner: Let them Make Money Mistakes

“The only real mistake is the one from which we learn nothing.” – Henry Ford 

The winter holiday season is the time of year when school aged kids often have a holiday break from school, spend extra time at home and oftentimes receive money and gifts. 

As Financial Professionals, it can be tempting to inject ourselves into the everyday money management decisions our children may be faced with.  Although this approach may be second nature to many financial professionals, the best money lessons we can teach our kids may be the ones they learn through their own money handling decision making.  I’ll share a story that unfolded with my tween/teen in one of her first impactful money mistake lessons. 

In our family we have a firm budget on how much we spend on our children’s shoes and clothing.  We learned to set this budget early on after realizing how quickly children outgrow their clothing and shoes.  One year, our teenager was experiencing a significant growth spurt.  This particular year her shoe size was changing by a half size in what seemed like every 3-4 months.  Because we noticed how quickly her feet were growing, we decided to limit the footwear we purchased for her and to do our best to buy the shoes/sneakers she needed on sale.  Well, when the tween/teen received some cash from a family member for her birthday, she wanted to make the next footwear purchasing decision. 

Since we have ongoing discussions about how to budget any cash received, the adolescent knew she had a requirement to save, give, and then spend (just one of our family money methods). After figuring out how much the teen would have available to spend, she decided she wanted to purchase a pair of expensive sneakers.  Well, I must admit that the term expensive is relative.  We personally don’t see the need to spend any more than 2-digit dollar amounts for footwear for kids.  On this occasion, we decided to loosen our parental controls and allow our teen to decide how much she wanted to spend.  We took her shopping and she found the name brand sneakers she wanted for a 3-digit dollar price.  She then did a little research and learned of an in-store sale and discount she could qualify for so the total price of the sneakers were now going to be $86 dollars.  She proudly purchased these very popular (amongst tweens/teens) sneakers and couldn’t wait to wear them.  Just like we (the parents) expected, she outgrew those sneakers within a few months.  The tween/teen was so disappointed to realize that she had outgrown those sneakers before they even looked worn. 

Fast forward several months and many more shopping trips for footwear. The tween/teen still talks about how she wished she hadn’t purchased those sneakers and saved more of her money.  Now when we go shopping for footwear, the teen takes the initiative to look for footwear that is on sale.  She has said many times that we (her parents) were right, and she should have listened to our advice about how much to spend on footwear. 

Now this money mistake we allowed her to experience wasn’t detrimental to her future wellbeing.  It was a mistake we allowed her to experience to reinforce the money management lessons we are modeling and teaching our kiddos on a daily basis. 

As we provide financial counseling to clients, perhaps we can encourage them to safely allow their kids to make money mistakes.  Not for the purpose of saying “I told you so” but in effort to provide a safe space for our kids to learn and grow through the process of making money management decisions for themselves. 

This winter, consider providing “space” for the kids/adolescents in your life to make a few independent personal financial decisions. These may be the lessons that they learn from the most.