Remember last year about this time, when you vowed that holiday shopping was going to be different? You weren’t going to cave to capitalistic urges to buy, buy, buy. Christmas and Hanukkah spending would be thoughtful, reasonable and even within your budget. Yes, well, it’s hard to be pragmatic in a season so filled with endless temptations, magical lights and Black Friday sales. Still, Marcia Alexander, a Roseville-based Thrivent financial adviser and mother of three boys, says this isn’t just prime buying season; it’s prime teaching season. If we want our kids to respect money and learn the joy that comes from giving to others, now is the time to package that discussion and wrap it up with conviction.
Q: This is a challenging time for many parents who struggle with just how much to indulge already fortunate children. Any advice?
A: I’m laughing because my husband and I were just having this conversation. We have four different Christmas lists and our kids are getting to the point where the saying is true: The smaller the gift, the more expensive it is. One thing we’ve always tried to do is figure out our Christmas budget ahead of time. We will go to a coffee shop and come up with an amount and hold ourselves accountable to it.
Q: How do you manage your kids’ expectations around that number?
A: They still (mostly) believe in Santa. We say, “When you write your gift list, remember that Santa doesn’t buy anything over $99.99.” There has never been a question like, “Why not?” Sometimes, I think it’s the parents who think, “Oh, I have to get this.” But there’s not a price tag when your kids open their presents. As a parent, step back and don’t fill in the void for your kid. Let them lead the way.
Q: You’re also big on experiences vs. things, especially as children get older. That sounds like a really good way to cut down on stuff.
A: Our kids are very receptive to that idea. In fact, we asked our boys this weekend to start writing a Christmas list and our oldest son, who is 13, said, “I don’t really have one.” It made us realize that, maybe with them being older, it is time for experiences like a big family vacation.
Q: You have an unorthodox approach to such experiences. As someone who’s been in the financial services industry for 20 years, tell us about your “skin in the game” philosophy.
A: Yes, I do believe kids should have skin in the game, based on their age and capacity. If we go on a vacation, and they want a meal or souvenir that is above the basic threshold, we will have them pay for a portion. If our boys want a hotel that is more expensive because it has a pool, we might have them use some of their savings to pay for the extra cost. We strive for them to feel like they’ve earned such experiences, rather than just being given.
Q: I’m guessing a lot of parents reading this are thinking, “Wow! Can you do that?” But I suppose this is a great way to teach kids to have respect for money when cash magically appears via Venmo.
A: I work on this a lot with my boys and, also, when I give financial workshops throughout Minneapolis and St. Paul. I ask kids who come with their parents: “How much does a gallon of milk cost? A video game? School lunch?” It’s important to break it down so kids can understand the value of money, that your parents go to work so you can do the things you want to do. As parents, we don’t always say, “We can’t buy that video game because it’s $60 and we don’t have $60 to spend.” We just say no. It puts things into perspective.
Q: Where do you stand on allowance? And, should it be tied to chores?
A: This is a debate my husband and I have gone back and forth on. My children don’t have an allowance. We have tried, but we aren’t disciplined enough to check in to make sure we’re consistently giving allowance tied to chores. We don’t pay for grades either, but we do pay attention and we don’t say no to everything right away. We’re trying to find that balance where they aren’t spoiled but they aren’t without. We’re not always successful but we also explain our thinking to them. When our son’s 13-year-old friend gets a brand-new iPhone and he has a [Motorola] Moto that he paid half for, we remind him that we wouldn’t be able to go out or do trips if we bought things like that. And my son has never cracked his phone screen. Part of that, I believe, is that he’s paid for half of it. He knows how many lawns he had to mow to get the money.
Q: At your financial workshops, what’s a common question?
A: A big discussion is around the share/save/spend concept. One of the biggest light bulbs that goes off with parents is the sharing component. Sharing can be making a family donation. But it also could be encouraging your child to save money to help buy a birthday gift for Grandma. Contributing in all these ways instills pride in your kids that you don’t see otherwise.
Q: When should saving begin?
A: Early. It’s hard to change your money habits if you didn’t have a good practice early on. In my workshops, I give kids 10 pennies and they have to figure out which bucket (share/save/spend) to put their pennies in. Some put all 10 pennies in “spend,” some all in “save” and some put pennies in each pot. Regardless, we want the goal to be that they continue to practice outside the class, even if they’re just saving $2 a month. Habit becomes reality.