SFP 171: How to Talk to Kids about Money [with Liz, author of Piggy Banks and Lemonade Stands]

Have you started talking to your kids about money? Money can be a taboo topic, even within families. In today's episode I'm chatting with Liz Frazier Peck author of Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance (and They're Never Too Young).

SHOW NOTES/LINKS:

Full Episode Transcription

Denaye Barahona:        

Hi, it's Denaye here. Episode 171. And today, the topic is "How to Talk to Kids about Money."

Thanks so much for tuning in. It is episode of 171, and today we're taking out a topic I admittedly know nothing about. And that's teaching kids about money. So thankfully since I'm clueless on this, I have a guest for today. So I'm talking with Liz Frazier. Liz is the author of the brand new book Beyond Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance (and They're Never Too Young). So in this conversation, I'm picking Liz's brain about how we can teach our kids more intentionally about money without adding too much to our plate. Because of course we always like to keep it simple.

A little bit about Liz, our guests for today. She's a certified financial planner and she's also a mom of two young kids. After working in financial planning, Liz came to understand that money was a taboo topic for people even within families. And as a result, many of us myself included, just really aren't talking to our kids about money that much. And it's a pretty well known fact that our kids are reaching the high school and university age with very little exposure about practical money management. So how do we start now in small doses teaching our kids little bits and pieces so that they're ready when they get older, they're ready by the time they had their first jobs to manage that money? They know what it means to save and to budget.

So I'm excited to introduce you to Liz and everything that we're talking about today. I know that I learned so much, and I hope to continue this conversation with her because I think it's a really important topic for all parents out there. So thanks again for tuning in and hope you enjoy this episode. If you have questions or comments, you can go to simplefamilies.com/episode171. You can also take a screenshot while you're listening to this and send me a message on Instagram. I'm always available to chatting with you over there too. Without further ado, here's today's episode. Hi Liz. How are you?

Liz Frazier Peck:           

I am good Denaye. Thanks so much for having me here.

Denaye Barahona:        

Thank you for taking the time to talk with me. There are a couple of topics that I feel completely incompetent when it comes to kids. One being how to talk to kids about the birds and the bees, which I did an episode on a couple of months ago. And the other one being money and how to talk to kids about money and how to approach money. I don't know, am I the only one out there that thinks this is kind of a daunting task?

Liz Frazier Peck:           

No, not at all. And it's really interesting and it's really exciting for me because this is such a passion project of mine. It's exciting to see that talking to kids about money is starting to be on the radar a little bit more. And we're starting to hear a little bit more about it, especially when it comes to teaching kids finance in high school and things like that. But I really feel like there's a pretty big tide that's turning from 20 years ago. I mean, most of us did not have our parents talking about money. So I do think it's something that's now becoming more of a focus for parents, which is awesome.

No, not at all. And it's really interesting and it's really exciting for me because this is such a passion project of mine. It's exciting to see that talking to kids about money is starting to be on the radar a little bit more. And we're starting to hear a little bit more about it, especially when it comes to teaching kids finance in high school and things like that. But I really feel like there's a pretty big tide that's turning from 20 years ago. I mean, most of us did not have our parents talking about money. So I do think it's something that's now becoming more of a focus for parents, which is awesome.

Denaye Barahona:        

Yeah. And it has to be, I think with the debt ratio in the U.S. right now. It's just, I mean there's no avoiding it. Although I can't say that because I've been avoiding it.

Liz Frazier Peck:           

Well, that brings up such a good point. And part of the reason why I'm so passionate about getting kids to understand money at an early age. Because if you look at American adults today, they're overall really struggling financially. I mean you said that the debt ratio, it's unbelievable and really scary how much debt we have in credit cards and in student loans. Most Americans don't have enough saved for retirement. And all of this comes down to a lack of financial education.       

And I'm a financial planner. And when I meet with clients, and just being a financial professional in general and talking to people about finance, I hear how intimidated people are about finance in general. And there's a lot of mystery around it. It seems really complex. And it doesn't have to be. You don't have to be a hedge fund manager or understand Bitcoin to be financially healthy. You really just have to understand the importance of saving early, debt management, how to spend responsibly, how to give back, the importance of giving back. And those are just some bare basics for people to understand to be financially healthy. But they're intimidated about it because nobody ever taught them finance. So adults are struggling today and don't understand basic financial concepts, but how would they? Nobody ever taught them.

Denaye Barahona:        

Right. And your book, Beyond Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance, is something that really appeals to me. Because I kind of just want you to tell me exactly what to do.

Liz Frazier Peck:           

Yeah, I mean it is. It's intimidating for parents I think to get started teaching their kids about finance because they don't understand that themselves. So they kind of feel like, well how can I even start teaching my kids finance? Because I don't understand this stuff. But I think something for parents to keep in mind. One thing is that they know a lot. You, you and all parents know a lot more about money than you think you do. You may not be managing your own stock portfolio, but you don't need to do that to understand finance and to be able to teach your kids how to be financially healthy. You are budgeting every day. You're making spending decisions every day. You're thinking about where to save your money every day. And a lot of this is kind of on autopilot. So you might not realize that you're doing it. So you do have a lot of basic understanding about finance. And also, you have something that kids don't, and that's experience. You have experience in this. You experience budgeting, experience in savings. So I think that that's really the biggest hurdle for most parents is I don't understand finance. So how can I teach it to my kids? And also, where in the world do I start?

Denaye Barahona:        

Right. And it's interesting. I feel like as I've gotten older, I feel increasingly incompetent. And I think that's because when I was young and I was in my twenties and single, I was great with my money and I was great with my finances. And I feel like I had it really under control. I think that as I got older and my finances got more complicated, especially once I got married and there were two of us that were spending on joint accounts. And then we had a mortgage. And things just became so much more complicated, so much more quickly, that I lost a lot of confidence in that. So you would think that as you get older, you get better at it. But I also think as you get older, things get more complicated. Maybe some people are like me where they feel like they just kind of start to suck at it.

Liz Frazier Peck:           

Yeah, totally. And it's partly exactly what you just said, that they do get more complicated. In your twenties, it's easy to save because you're just thinking about yourself. So you've got extra money and yeah, I'll put this into retirement, I'll put this into an emergency fund.

So it does get a lot more complicated. You start taking on more debt because you have larger purchases like homes. But also, it's because you have such a great responsibility and you're terrified of making a mistake because you have kids. So having kids just puts the weight of the world on us, and we're so worried we're going to do something wrong because now we're taking care of kids. And that's kind of how I actually became a financial planner. I became a financial planner when I pregnant with my first child, because I immediately went into crazy momma mode. And I immediately was like, "Oh my God, I need to have everything in order. I need to get my will together, we need to make sure we have all of our insurance." I started making spreadsheets for everything that I did, every place that our money was, looking at our investments.

So I think that it is. With parents especially, it's part that your finances get more complicated, but it's part that there's more weight behind those finances. Your decisions actually have real consequences for not just you but for your family. And you want to make sure that your family is protected and prepared, and it kind of makes you paralyzed.

Denaye Barahona:        

Yeah, absolutely. And how old are your kids, Liz?

Liz Frazier Peck:           

They are three and six.

Denaye Barahona:        

Okay. So very close in age to mine. So I feel like this is sort of a start of a new journey teaching young kids about money. And with my background in child development, my first thought is with kids as young as ours, the best way to teach them is through tangible means. So that means going to this all cash system where they see me spending 20s, and fives, and tens, and they see me with change coins that I can actually touch and handle.

So that's where my brain goes. It's like I need to drop the credit cards, just go to cash so they could see the cash. But at the same time, I just am not willing to do that. I know that works for a lot of people, but for our family, it just seems like too much work and I don't think it's the right fit for us. So do I need to go to an all cash system to really get kids to understand how spending happens and how it works?

Liz Frazier Peck:           

I'm so glad you asked that. First of all, because this is really right there why I wrote this book. Because I wanted to write a book for parents that was realistic. I didn't want this to be something that added to their plate or didn't work for their families. I wanted it to be realistic. And it's just not realistic. Most people don't have a $136.25 cents in their pocket when they go to the grocery store. So that's not always realistic. And I get that, and it's not necessary to teach kids finance.

What I would recommend is having some cash and coins around the house, and doing some basic activities. And this is also a great way to incorporate teaching math as well. Have them count out your change, have them do games like how many different ways can you make 74 cents with this amount of change and things like that. So that's a way to kind of get them actually using money and engaging with it. Because kids at young age, we all know this. They learn by using their senses. They learn by engaging with something. So they want to touch it, they want to feel it, they want to play with it. Probably-

Denaye Barahona:        

Put it in their mouth?

Liz Frazier Peck:           

Our three year olds. Exactly. Put it in their mouth. However they want to learn, I'll go for it. But yeah, so a way that you can do this is just it in small purchases. So if you're going to a coffee shop for example, have $7 in your wallet. Which I get, that's not always easy. I rarely have cash in my wallet. So I have to think about it and say, "I'm going to have my daughter with me. I'll get $10 out."         

So have $7 in your pocket, and have your child pay for it. Have them give the money to the cashier, have the cashier give it back, have them count it out. So you can use just small purchases as examples. You don't have to go completely cashless, because it's just not realistic. And I think that on another level, this is an interesting topic because there's so much focus right now on teaching kids finance, that there's a lot of new financial apps that are dedicated directly to teaching kids finance. There's a lot of different new online bank accounts and things like that. And I think that those are great tools. They're fantastic, and I'm thrilled that people are involved in getting kids to learn finance. But I do think that they need to start with cash because digital money is just too hypothetical for young kids.

But once we have the basics about cash and coins, and understand the values and things like that and are comfortable with it, then I think it's great to move on to digital money. Because we want to be realistic. We want our kids to be able to function in the real world. And this really is a digital and almost cashless society.

Denaye Barahona:        

Yeah. I actually, I'm kind of embarrassed to admit this. But my son just shortly after his fifth birthday, he has friend had a dollar. I heard him ask her, "What's that?" I was like, "Oh boy, I've got a lot of work to do."

Liz Frazier Peck:           

And that's totally understandable, and it's nothing for you to be embarrassed about because nobody is using money anymore. We don't have cash laying around anymore. So kids just aren't exposed to this. And it's interesting because 20 years ago, this would have never been a problem. I mean, whether or not the parents were teaching finance, we just see money everywhere. When we think of money, we think of dollar bills and coins. And now when we think of money, we think of a plastic card that our parents give to the cashier, and they can get whatever they want.

Denaye Barahona:        

Yes, exactly. And it's so abstract to understand that when you can and when you can't use your card. And that's something I feel like I'm struggling with my kids explaining. I think about yesterday for example, we went into the city and we were in Central Park. And we went there so that my son could drive the remote control boats. He's really been wanting to do that since last year and that's the whole reason that we went. So we went and we drove the remote control boats, and then right next to the remote control boats is the guy with the giant bubbles. And it's free, but you have to tip him a couple of dollars. So my daughter really wanted to do the giant bubbles. So put $5 into the bubble guy's jar. We spent $5 on the bubbles, and then we went to the zoo. Which the zoo in Central Park is not super expensive. So it wasn't really that pricey of a day. But at the zoo, my son wanted to do one of those quarters where you crank the quarters, which is 50 cents. 51 cents because you put the penny in and then you smash the quarter, or smash to the penny.

And I told him no, that he couldn't do that. And most of me was saying no just because I had said yes to everything else that day pretty much. It's not that I couldn't afford the 50 cents, but I was just saying no because I had felt like I had said too many yeses, and that my kids need to learn these limits around spending money. But then I also think is that really making a difference, and do I need to be explaining to him I'm saying no to you because we've already spent money on the boats, and we already spent money on the bubbles? Should I be going into that lengthy explanation about the things that we already spent on and how we need to limit our money? I guess how do I know how much to say?

Liz Frazier Peck:           

Yeah, that's a really good question. And it's really relevant I think for most parents because this is probably how money conversation start, or should start. This is a great opportunity to start talking to your kids about money.

And I think that when your son is asking, "Can I have this?" And if you're at a point where you feel like I've bought him plenty, I probably don't need to buy him anything more. I think it's fine just to say, "Well you know what, we've already spent $5 on this. We spent $10 on this. I really didn't want to spend more than $15 today. So we've already spent that, so we're not going to spend it on this." And I think as a parent, just keep in mind your expectations. Your expectations aren't that they're going to learn that and then it's over. You're just starting to expose them. You're starting to expose them to money and the value of money. And that when you buy something, that's a decision. And every time, because I think that even adults, people lose sight of the fact that every time you buy something, that's a decision. You're making a decision to use that $10 for this rather than using it for this, or rather than saving it.

So I think that just by saying it to them and telling them that we've spent enough money today so I don't want to spend anymore on this. I think that you're starting to expose them to some important concepts around smart spending decisions.

But another thing that you can do, and this is a tip that I have in my book, that if you're going someplace. Like let's say when you guys were going, if you guys do another day in the city. And you know that you're probably going to spend money on a couple of things like that. Like the penny machine at the zoo, maybe they want a slushie someplace, some extra things.

You could set a budget for your child in the beginning of the day and say, "Here's $10. This $10 is for you. You can do whatever you want with it, but you're not getting anything more. So I'm going to pay for your transportation, I'm going to pay for your food." Outline exactly what you're going to pay for and say, "Anything else, you buy. But once the $10 is gone, you're not getting anything else." So that way when they decide that they want to buy something, they want bubbles and they need to put $5 into the bubble man's bank. Then you say to them, "Okay, so I just want to make sure that you understand that that's $5 you're putting in there. You only have $5 left. So maybe that's a slushie, or maybe that's a small toy in the gift shop. But it's not going to be anything larger than $5." So that's a really easy way to set some clear boundaries for your kid while you're also teaching them.

Denaye Barahona:        

I love that, and it's so simple. But the only thing about that is I do feel like it would kind of take over our day. My kids would be like, "Well I have $3 and now I have $5, and what am I going to spend my money on?" And I just feel like it would be, it would kind of drive the way that we spend our day, this idea that they have to spend the money, and talking about it all day. So do feel like that would kind of fade off if we did that frequently, the excitement around it? Have you done that with your kids multiple times? Does that excitement wear off and just become part of your regular routine?

Liz Frazier Peck:           

I do. And in the beginning, and this isn't all the time because there's not a lot of times with my kids where we're going something where I know I'm going to buy them toys or, or presents, or treats. Most of the days, we're just doing our regular routine and we don't incorporate that. But yeah, I've done this with my kids. Not my three year old because, three, you can start talking a little bit about things, but he's not really retaining a lot of this.

But with my six year old, we do this. And if we're having a special day, we do a lot of mommy daughter days. And I'll tell her up front, "This is what we're going to be doing throughout the day. And there's going to be a couple places where you can maybe by a souvenir, or maybe you're going to want an extra treat. Then I'm going to give you this amount of money, and you can use it however you want throughout the day." And in the beginning, the first couple of times, it is something that they focus on because it's just new to them. But after a while, they get into the habit. It really only took my daughter a couple of times, but they get into the habit of just understanding, "Well I've got some money for extra things." So it doesn't seem like a burden. It seems like wow, I get to get some extra things for this money.

And to make it a little bit simpler, you can say to your kids, "I'm going to get you a slushie, and I'm going to get you, I'll get you these things. But if it's above and beyond that, then you have money for the extra thing." So they don't feel like they aren't going to get anything if they spend all of their money.

Denaye Barahona:        

Got it. Okay. So having a little bit of wiggle room in there and playing around with your kids to see how to work this best. But I do really like that idea and I think we're going to definitely try that next time. Although I will have to do it with my three year old because there's no way I'd be able to get away with giving my five year old money and not my three year old. For some reason, she's very interested in coins right now. She always has to have coins in her pocket or in her mouth. But she's so interested, she calls them magic coins and she usually just insists on having a quarter and a penny everywhere she goes. But yeah, she's super interested in just touching them and having them with her.

Liz Frazier Peck:           

That's so funny. My son is also. and it just shows that how quickly they absorb things. He's three years old, he doesn't really understand the value of money or coins, but he talks about it all the time. I mean granted, I just wrote a book on it. So my kids are probably a little bit more aware than the average three and six year old about money. But it does, it's interesting how quickly they absorb this information, how open they are to it, and how much they retain. And there's just some funny examples like I think about with my daughter. My daughter is six, and the way that we started teaching, and this is how I recommend in my book and with families. To start the conversations with money around needs versus wants. That's a really easy way just to start this, just talking about needs versus wants. It's not about money, it's just there's certain things that we need to live and ask your kids. What do you think that we need to live? And usually ice cream is going to come up. You say, "Well, ice cream is great. We love ice cream, but we don't need ice cream to survive."

So they start getting the hang of it and it's fun. And you kind of start making this like a car game with your kids, right? Sunglasses or shoes, which is a need and which is a want? And you get some interesting conversations because sometimes they're not clear. Is a car a need or a want? Well, if you need to drive a car to get to your job, then that's technically probably a need. But is a luxury car a need? No, that's more of a want. But anyway, so back to just how kids retain so much information. I do this with my daughter all the time.

So one day, I was sitting outside with my daughter. Just talking to myself, "We really need a bigger yard." And [Maddie 00:22:36] just looks straight at me and goes, "Mom, you want a bigger yard. You do not need a bigger yard."

Denaye Barahona:        

Yes.

Liz Frazier Peck:           

And I was like, "Oh, good going." So anyway, it's interesting how quickly kids even as young as three start talking about money. My son actually, he's obsessed with looking at the book and he's also obsessed with dinosaurs. So he keeps calling it finance and dinosaurs.

Denaye Barahona:        

Close enough, right?

Liz Frazier Peck:           

Close enough. Right.

Denaye Barahona:        

So I feel like our kids are actually learning a lot more just being around us every day. It's one of those things I sense that we feel like we need to teach our kids outright, but really they learn a lot of it just through our modeling and just through being around parents who are spending money day in and day out on regular things.

Liz Frazier Peck:           

Yeah. And that's such an important point and something for parents to always keep in mind. Because it's like anything else. It's like nutrition. It's like anything. Our kids, we are our kids' number one main role model in life, for better or for worse. So whether we're intending to teach them or not intending to teach them, we're teaching them and we're influencing them. And that's especially true for finance. Every time that we talk about money, every time we don't talk about money, every time we go on spending splurges, every time we travel, every time we eat out. Our attitudes around money. Everything we do is teaching kids about money. So it is important to do it intentionally, you know?

And there's some pretty easy things that you can do just to make sure that you're being a financial role model for your kids. And let's face it, all of us could use some better financial behaviors and kind of think a little bit more before we spend. But it's things like when you go grocery shopping with your kids, make a list out. Make a list of the things you want and talk to your kids about why you're doing this. Well I'm making a list because I don't want to buy anything that I don't need right now, and I don't want to spend too much money, and I want to stay focused.

So we're going to stand this list. And when you get to the grocery store, go through the list and help your kids. Have your kids help you find the things on the list to bring over. It helps them understand impulse buying and how to try to avoid impulse buying. And another way you can do that is if your child sees something or you see something that you really like, but that's a little bit more money than what you would normally spend. Just say out loud. "I think I'm going to wait. I'm going to wait a day before I buy this because I want to make sure that it's really worth this money because this is kind of expensive." So that's a way to set an example, a positive example when it comes to impulse buying, smart shopping.        

Also make it a point when you're talking with your kids about buying something, whether it's for you or whether it's for them, look at alternatives to buying. It doesn't always have to be buying something new. Say, "Oh yeah, you want a new bike? Yeah, that's great. Well let's look and see if we can buy one from a Facebook group. Or if it's a toy or a book, well let's look at the library first and see if we can rent one from the library for free." So always look at alternatives for buying things. That's another great way to set an example.

Denaye Barahona:        

Yeah, and I think just having the conversation about it. Because I know a lot of my spending decisions really happen in my head. It's very rare that I'm actually talking about my spending decisions out loud. Unless for some reason I'm talking with my kids and really trying to intentionally be teaching. Or if I'm talking to my husband and we're making a joint decision. But the day in and day out spending and money conversations are really all going on in my brain, and really working on making some of those more verbal, and putting those out in front of my kids a little bit more so they can see me making those decisions. And they can see the times when I choose not to buy something, because I think that's kind of invisible. They see us when we are buying something, but they don't hear us weighing through the pros and cons and deciding not to buy things.

Liz Frazier Peck:           

Yeah, and that's such a smart way to put it. That's exactly right. They're learning from us and they don't know that making a purchase is a decision. So they need to hear from us that we're thinking about it. That we've identified that this is a decision. That we are looking at different options. We're evaluating them, we're making sure that we're making the right decision. And then we're thinking about it afterwards and thinking about whether this was a good decision or if it's not. And it's okay to talk to your kids about some spending mistakes that you made. You want to keep it pretty positive, because you want to make sure that your kids don't feel any anxiety about finances. So I don't recommend being completely open with your finances if you are stressed about money.

Because again, this is kids, really their first experience with money and you don't want them to have any anxiety or bad feelings around it. But it's okay to be like, "Last week, I bought this coat. It was too much money and I knew it, but I bought it anyway. And now I'm really regretting that decision because I could have used that money for this, this, and this." So it's okay to walk through and talk about mistakes that you've made, and what you've learned from them.

And then also, talk to your kids about things that you're excited about. "Gosh, I really, I'm so excited about this vacation that we're taking. For the past couple of months, we've really been watching our spending because we wanted to save up enough money so that we could do some really fun dinners out and try new restaurants while we're on vacation." So it's really important, and it's a great way to teach them by talking through your spending decisions, and your successes, and your failures.

Denaye Barahona:        

Yeah. And talking about it. Because a lot of times talking about finances is not something that we're comfortable doing. It's something that seems a little bit inappropriate. Especially for me when I'm out in public, like when I was at the zoo yesterday trying to explain to my son about why he wasn't getting the smushed penny for 51 cents and explaining that we've already spent enough money today, and we've already had a lot of fun experiences. That I feel like was a little bit uncomfortable because there were a lot of people around. So to be talking about that in public around a lot of people I think wasn't entirely comfortable for me.

Liz Frazier Peck:           

And it's so funny because you'd probably be more comfortable talking about the birds and bees in front of people rather than ... because it's such a strange concept because we are encouraged as parents to start talking to our kids about everything at an early age. I mean really, the birds and the bees, and drugs, safety, nutrition, and everything else. But for some reason money is a taboo subject. And it's just because it's never been talked about. In the old days, it was very taboo to talk about money. You don't want to seem like you're bragging. And it was something that was private.

And also, I think that because there's so many, it's especially important to be open with your kids about money because there's so many mixed messages about money out there. If you look, I mean in today's social media, there's just some people in some places, people envy the wealthy, and money is everything, and money's really important. And you've got to drive certain cars and have certain houses. And then on the other hand you hear things like you're greedy if you want more money, and money's the source of all evil.

So it's important for your kids to understand that money is neutral. Money is not good or bad. Money is neutral, and it's a tool. It's a tool to help you reach your goals. It's important. It's not everything, but it's important. But talking openly with your kids about money takes the taboo away from it, and it normalizes it so that as they get older, it's not something that they're uncomfortable with. It's a normal part of their daily life. Just like good nutrition is, and just like being safe, and staying away from drugs, and taking care of their bodies. It's something that it's normalized. And just talking about it openly normalizes it. But it's more uncomfortable for the parents than it is for the kids. The kids don't care. The kids have no idea that money is something you shouldn't talk about. So I think this is something, I'm hoping this is something that's going to be changing with the next generation.

Denaye Barahona:        

Right. Because the more we talk about it, the more comfortable we're going to be, and the more comfortable our kids are going to be talking about it and hopefully more aware as a result.

Liz Frazier Peck:           

Exactly. And that's really, that is just why I'm so passionate about this because it's such a simple thing. It's such a simple thing to start talking to your kids about money. You don't have to be a financial genius. Just start getting them comfortable with the concepts around money. And then when they're older, they're going to have some basic concepts. They're going to understand that they save early, that they should have an emergency fund, that they shouldn't get that first credit card that's 20% interest rate, and things like that. And that's going to make a massive, massive difference in their financial life and their financial health going forward. Which affects everything.

Denaye Barahona:        

Yeah, absolutely. So I know everyone is thinking this. What about an allowance? What do you think about allowances?

Liz Frazier Peck:           

I love allowances. If there's such a thing, I am a pro-allowancer. It's a great debate right now. It's a huge debate among parents, and it's understandable why it's a debate. Because as parents, what we do best is worry that we're going to make some gigantic mistake that ruins our kids for life. So allowance right now is that debate. I feel pretty confident in confirming that there's really no right or wrong way to give an allowance. As long as you're following some basic rules. You want to keep it positive. You never want to use allowance in a negative way. Like, "I'm going to take away your allowance," as punishment. Because again, this is kids' first experience with money. So you don't want it to because anxiety.

And as long as you're not giving them enough money for they can put a down payment on something, or you're making them do something dangerous, like scale the roof for allowance. Really, there's no right or wrong way to give an allowance. But I'm a big fan of allowance because the best tool to teach kids money is money. And giving them an allowance actually gives them money to practice on. They can practice spending, they can practice saving, they can practice giving. They can make mistakes, and they're making mistakes at a time when it doesn't matter. There's no real consequences, and they can learn from it and move on.

Denaye Barahona:        

Yeah, and I know that there's a lot of opinions about this out there. So I appreciate hearing yours on it. We haven't done an allowance yet. I don't really have an opinion on it. It's one of those things, I feel like I've been avoiding this subject at all costs. I think it's definitely a conversation that I just start with my husband, and figure out where we're going to really, how we're going to move forward with this with our kids.

Liz Frazier Peck:           

Yeah. And there's a couple different ways to start an allowance and to give your kids an allowance. There's the traditional way of your child does chores and you pay them money each week for doing chores. And that works. And if that works for your family, that's fine. But the problems there are that first of all, which my six year old wouldn't, but I can completely see my three year old when he gets of age saying, "You know what, I don't need money this week. I'm not going to do chores." So it gives them the option, which you don't want them to have the option. You want them to do certain things in the house because they're part of the family and they're just expected to so you're not paying them for it.

So a different way to give allowance, which people started kind of talking about recently is giving them a basic allowance. And an easy rule of thumb is a dollar per year. And my six year old is getting $6 a week.

And you give them an allowance, you give it to them each week. No matter what, it's always $6. It's a good time to talk about money with them. It's a good time to talk about well, are you still thinking about saving up for that Lego set or have you changed that? You've got six more dollars in your spend. That'll be great when we go to the beach next week. Just to kind of regroup and talk a little bit about their money and how they're managing it.

Denaye Barahona:        

Would you always do cash for that?

Liz Frazier Peck:           

I always do cash. Yep. When they get older and they understand money, they understand cash coins, or their piggy banks are literally bursting, then I think it's a good time to move into online. And a great transition is just opening a bank account with them.

But another way that you can, because I think that the issue with that structure of allowance is that parents think, "Well, then my kids don't understand that they have to work to make money. They're just getting money each."

So you can outside of the allowance say, "If you want to earn extra money, you can wash the dog for a couple of dollars or you can wash the windows." Or do something that's above and beyond what they should basically be doing. But then that makes chores, their basic chores not tied to money. Every day you should make your bed, you should help with the dishes, and you should clean up your toys just because you're part of the family. And that's what we do.

Denaye Barahona:        

Right. And I think that's the part that does trip up a lot of parents. What are the responsibilities involved with an allowance? And I think that decision ultimately is really personal for every family.

Liz Frazier Peck:           

It is, it's personal. It depends first of all, on your financial situation. Even giving your child a dollar a week is helpful because you're giving your kids some money to practice on. But I think that the biggest thing with parents and allowance is for them to set their expectations.

The reason you're giving an allowance to kids is not so that they can start saving for allowance, or make a dent in a big saving fund, or something like that. It's for practice. That's all you're doing is you're giving them money so that they can practice and they can learn about money. And however you want to do it, whatever works for your family is going to be beneficial for them.

Denaye Barahona:        

Oh good. Well I love this and I love this conversation. I'm hoping it's something we can keep talking about on Simple Families, because I think that so many parents need support around this. And I think so many of us are doing much better than we already know. And we can just tweak a few things, start a few conversations and actually make a big difference just from the little things.

Liz Frazier Peck:           

Yeah, I would love to keep talking about it too. Especially because with Simple Families, you're all about keeping it organic and simple. And I think that that's really important when it comes to teaching your kids finance, because when parents here teach their kids finance, I think that's really overwhelming. And they envision these big sit down lessons and they're like, "I'm a part-time chauffeur, and a part time cook, and nutritionist. And I'm trying to have a social life. Oh by the way. I work and I have all these things on my plate. How in the world am I going to add teaching finance on my plate?"

But it's something that really you can do throughout the day doing things that you're doing every day anyway. So it's not meant to be something that's adding to parents' huge to do lists. It's meant to be something that they're already doing anyway, and they can just incorporate finance into their lives with their kids.

Denaye Barahona:        

That's great. And I think this book is going to help so many people. So Beyond Piggy Banks and Lemonade Stands. Thank you so much Liz.

Liz Frazier Peck:           

Thanks so much for having me. It was great to talk with you

Denaye Barahona:        

And is there anywhere we can find you on the internet, on Instagram, Facebook, that sort of thing?

Liz Frazier Peck:           

Yeah. I have a website. That's http://lizfrazier.com. And Twitter is lfrazierpeck.

Denaye Barahona:        

Great. And that's Frazier spelled F-R-A-Z-I-E-R, right?

Liz Frazier Peck:           

Yeah, you're one of the rare people who gets it.

Denaye Barahona:        

Awesome. And I'll put those links in the show notes too.

Liz Frazier Peck:           

Okay, that would be great.

Denaye Barahona:        

I'm so glad that you tuned into today's episode. If you want to stay in touch with Simple Families, go to simplefamilies.com and leave your email address. The email list is the best way to stay in touch. You're going to get all the updates with what's going on the blog, on the podcast, and in the community.

If you're interested in staying in touch with Liz, our guest for today, you can find those links over in the show notes. The link for the show notes is simplefamilies.com/episode171.

Something fairly new to the podcast, all the episodes are now going to have transcripts. So if you go to the show notes, not only can you get the links to the things that we're talking about, but you can also get the full transcript for the episode. Thanks so much for tuning in, and I'll chat with you next week.

Denaye Barahona

Dr. Denaye Barahona is a loving wife and mama of two. She partners with families to tackle the challenges of raising children. Denaye is a minimalist who claims to be a decluttering expert (don't let her near your closet). She loves to travel, talk health-and-wellness, and give unsolicited advice. She has been featured on the likes of The Today Show, The Wall Street Journal, The Huffington Post, The Minimalists, Motherly, Becoming Minimalist, and numerous other media outlets. Denaye holds a Ph.D. in Child Development and is a Clinical Social Worker with a specialty in child and family practice.