Thursday, September 27, 2012

Cheap Mistakes

Money takes practice. Many parents assume that their kids will learn good money habits just by living in a house where good money habits are practiced. That is no more likely to be true than assuming that if you are a good driver your child will be one too. Like driving, handling money has to be practiced. How do you let kids "practice" with money? Let your kids make cheap mistakes.

Experience is a powerful teacher. We as parents often want to shield our kids from bad experiences, but some lessons are best learned that way. If you give your kid an allowance, teach her to set aside part for sharing, part for saving, and then let them experiment with the rest.

You already have experience. You know that cheap toy is going to disappoint. You know that it is going to break, under-perform, or wear out too fast. So you want to tell your child not to spend his  allowance on that. Did your child learn about cheap products by taking your advice? No, your child learned that you don't trust her to make her own decisions and, maybe, that it wasn't really her money. If, on the other hand, you let your child make the poor choice, it cost a few dollars you were going to give her anyway, and she learned, from experience, that not all merchandise is equal.

I think this is valuable because this is a CHEAP mistake. Far better to let a seven-year-old buy an inferior toy than to have your sixteen-year-old get taken when he buys his first used car. You can buy this lesson for $2 or you can get it for $2000 later. A disappointed child is going to be receptive to lessons about buying that you want to teach her. And you will be more willing to calmly teach from this mistake than when the $2000 used car needs a $3000 transmission. Very few lessons are learned without practice and the ones best remembered are learned by making mistakes.In the long run it makes good money sense to let them make cheap mistakes.

Other cheap mistakes without dire consequences that will teach invaluable lessons:
  • Having to pack a lunch every day for a week because your lunch money was spent on popcorn at the movies.
  • Having to settle for a less desirable birthday present for a friend because you spent your money on yourself.
  • Spending a clothing budget intended for the whole semester on one pair of jeans and some pricey shoes and then having to wear last year's now ill-fitting clothing.
  • Not putting money aside for gas and having to ride the bus to school until "payday."
Letting your kids sink or swim, when the consequences are manageable and short term, is very helpful in the long run. Handling money is just a skill to be mastered like reading or laundry. God has entrusted you with this child and it is your job, as the steward of this child, to teach this skill: to handle what they have. You can do it, because whether you've managed your money poorly or well, you know more about money than he or she does, so embrace those cheap mistakes and teach the lessons to be found in them.

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