DIY Financial Education for my Daughter
Jan 26, 2020
From time to time I take an hour to google personal finance-related media that is close to home here in New Zealand. It’s not exactly plentiful and it all too often revolves around my least favourite topic of housing or the proliferation of easy credit and how as a country we think it’s a good idea to educate our children about money, but then fail to do so. On this last topic, I’m all for educating our kids, but when I read on, we always seem to focus on the “why we should” yet lack the “how we should”. It always leaves me wondering about the financial education of my own child.
If you want something done, you might as well do it yourself right?
So, while people with more financial education than myself talk statistics and reflect on the matter, for the last 12 years I’ve more or less just been getting on and dealing with the matter; how to make sure my own daughter, who is now 12 does not become sucked in by student loans, credit cards, buy now pay later and the inability to buy her own home but instead live a life where money is simply used as a tool to get where she wants to go.
My thoughts on educating kids is that it’s a minefield and it’s extremely difficult to come up with a clear lesson plan.
If the subject of Money was as simple as “income comes in, income goes out” then it would be a straight forward education, but looking at how every person relates so differently to money, it is just not that easy. So, for me, I teach my daughter what I know, with all the biases I have and I’m just thankful that my relationship with money means I’ve worked out how to have it be a positive thing in my life instead of a pain point. I want her to know that if at any point she is in a financial rut, it’s fully within her power to change that and if she is down, she can get back up and hopefully if I’ve given her a few pointers along the way it’s more likely for her to succeed than fail.
Today’s blog post gives you a few insights into how I do it.
I love the school holidays, rules kind of go out the window in regards to her bedtime, getting out of bed by a certain time, eating times, screen time etc and we three just rub along enjoying ourselves. The fact that I work part-time and Jonny works from home and that his work all but dries up over the Christmas period means that one of us is always on hand. BUT the one downside is the enormous mess that gets created as my daughter moves from one creative project to the next. She is not a child to sit quietly and read a book but instead can abuse the word “multitask” like the best of them: sewing/knitting/working on her laptop/painting/drawing/paper mache/making things out of boxes/watching a movie - all in one session! It starts at her own desk in the living room - both Jonny and I have workspaces in the living room, so she has her own too. But, her mess soon overflows to the kitchen table and when she is out of space there she finally moves to her own room. When people arrive I spend the first five minutes apologising for the mess and frantically trying to create space so we can sit down and have a cup of coffee.
The MESS does my head in! Yes, it’s creative play and she does do some pretty cool stuff but mess stresses me out and coming home to it is probably the only time I tend to lose my cool.
We needed a solution.
And this was to restructure her room into a place where she could happily hang out and create to her heart’s content. Her room had become a miss-matched dumping zone with too much stuff and nowhere to put it. But at least I could shut the door on it and it was her problem and not mine!
So, we came up with a plan.
The Plan:
Let’s build a more permanent closet space to hold clothes, toys, games etc.
Let’s create a large desk space with lots of storage, room for her computer (for future homework), lots of room for books and knickknacks and all the materials she needs to create her projects with a large desk space to work on.
And let’s do it as a family project. Such fun! She was excited to do it, which was half the battle won already.
It’s her room, so she got to lead the design process, describing what she would like and doing some drawings.
Our daughters and Jonny’s rough drawings of what needed to be built.
Jonny then refined the design, measured it up and then he headed down to the hardware store and priced it up:
Wood - $290
Paint - $70
Curtains - $65
Screws and miscellaneous - $50
TOTAL - $475
“Oh”, she said, when she saw the total cost, she thought it might be game over and spell the end of the project.
And just on that figure of $475. How did she know that was a decent sum of money, one that would give her cause to pause?
Each week when we go grocery shopping she knows that our aim is to spend less than $200. When I get paid, if she happens to be walking past when I’m looking at my online banking I tell her exactly what I got paid and how many hours I had to go to work for. We have always involved her in everyday conversations around money so over the years she is building up a mental picture of what life costs. So, she knew that $475 was a decent amount of money for us to pay to refurbish her room, therefore it was an easy conversation to talk about how we could earn money to pay for it.
How to pay for the makeover?
Because, next problem, we don’t have $475 (well, technically we DO, but I don’t want to spend it on doing up her room). Therefore, as she packed up her entire room into boxes so we could clear some space, we sorted through her treasures and she soon realised that she had items that she no longer needed and if we just sold those things, that could pay for her room refurbishment. I too had things I no longer needed and was happy to sell. So, out came the camera, each item was ‘staged’, photographed and put up on FB for sale. We chatted about what we would be a fair price to ask for that second-hand item and that is how we set the prices. That’s an education in itself. For example, she was selling a book she had finished with, the price on the back said we had paid $25, but it was worth about $4-second hand; that’s a lesson in depreciation right there! Fast forward ten years and we will be having the same conversation but this time it won’t be books we are talking about, but it will be cars. In the end, we took all of our books to the fantastic secondhand bookstore we have here in Alexandra (Wunderlust Books) and Tim gave her $125. She was more than delighted that she got good money for books she had read and enjoyed but no longer wanted. Plus he gave her a CHEQUE, something she has never really seen and this required a trip to the bank to cash it, yet another thing she has never done because all of our banking is online of course.
Some of the items that were sold to help fund the room makeover.
Money collected from the sale of the items we no longer needed.
When you are selling a number of things at once it can get confusing as to who purchased what, how much they paid and when they will collect it. I’d no sooner mentioned this when she devised a spreadsheet to handle this information. And VERY handy it was too:
The spreadsheet that was created to track who purchased what and for how much and when it would be collected.
Within just 48 hours we had sold $408 worth of items, just $67 more to raise. People had come and gone from our house, handed her money, collected their stuff and left happy, the bag of money was growing and the refurb could begin. Over the following week, all but two of our items sold and she became more and more confident about listing things, selling things and really importantly, dealing with the ‘customer’ upon collection (probably the hardest part for her because she is quite reserved).
To save on costs we repurposed a lot of the old shelving in her room and she spent hours working with me and giving it a new coat of paint. As with any proper DIY project, Jonny managed to get out every power tool he owned to complete the job. We sewed new curtains using the fabric that she and Jonny had found for sale online. Many times she returned to her boxes of stuff and said: “I think I should sell this Mum”. At which point she learned that even though she/we had paid money for things, sometimes no one else wants those things and she will never get any money back for them. So, we boxed those items up and donated them to a charity shop downtown.
We collected the receipts for each purchase for the new materials and we compared the total costs of “items purchased” with “items sold”, also known as math. I created a new “Bedroom Makeover” budget in PocketSmith where I could keep track of what we spent and what we earned, which showed us that when all was done, this room makeover had cost us just $67.23 because we had paid for everything else by selling things.
PocketSmith Dashboard showing the Bedroom Makeover budget.
And finally, just a week after we began, her room was complete! Apart from all of the time we three put in, the total cost was $475, but due to selling so much stuff, we were only short $67.23. In fact, with some items yet to sell, we may yet come out ahead.
The huge new desk.
New shelves and curtains.
She has really REALLY taken to using her new room so much more, she happily sits in there at her new huge desk working away. And as I write this I’m looking at my kitchen table and there is NOTHING ON IT, no mess! A remarkable turnaround. And you know what, even her own room is tidier because she loves the new layout so much and is taking pride in keeping it looking great. And she is churning out even more art than she ever has before:
Some of the artwork that is being churned out at the new desk.
So, while I wait for the already overworked education system to teach my daughter how to handle money, I’ll just spend a bit of time teaching her myself about how money works in real life. I have a friend who speaks Spanish and much to the annoyance of his wife, he speaks to his kids predominantly in English and they send their girls to Spanish lessons instead. It’s the same with money, every day of the week we use money at home to buy something, so the easiest thing to do is just to speak with your kids about what you are doing with it and why, instead of asking someone else to explain it to them at school. And that way, one day, when they leave home having become adults they are educated about how to make money a positive thing in their lives, not something confusing that causes them distress.
Any lessons learned?
And I was interested to ask my daughter, “what were the lessons learned?”
It took a while to extract anything useful out of her, she is not the keenest on having her thoughts written in a blog post but the gist was that she realised that although she spent (or we spent) good money on an item when it came time to move it on it was worth a fraction of its original price. So she does not really need to know the word - depreciation - but at least she understands the concept. She also realises that you have the ability to create your own furniture if you just have a bit of imagination, a bit of skill and a few power tools. Oh, and she loved using the roller for painting!
We didn’t start this project with a “list of objectives and KPI’s”, so it’s difficult to quantify the lessons learned, but I’m happier that she has learned a heap of soft skills in doing this, we each enjoyed the project and had some great conversations and ever since the paint dried she has not stopped using the space. So, that’s a win in my book.
The Challenge
I challenge you, next time it’s payday, invite your child to have a look at what you earned and just see where the conversation flows… show them how much your take-home pay was (is that a lot of money Mum?), what your KiwiSaver contribution was (why did they take that money off you Mum?), what your student loan deduction was (why are you paying for university still Mum?), how much tax you paid to the government (what do they do with all that money of yours Mum?)...
It really is as simple as starting a conversation because there is no harm in it at all and it won’t just get your child thinking, having to explain things in a simple way will also get YOU thinking about what you do with your money and why.
