By Anna Blanch Rabe
What is your earliest memory relating to money? Did you ever visit a bank to make a deposit with your own parents? Or go to the grocery store? Did your parents ever discuss their budget with you? We often learn lessons about money and finances without even being aware. Research shows that financial attitudes, habits, and norms begin to develop between the ages of 6 and 12.
Doug Nordman is a Navy veteran, a submariner, who surfs almost daily and has written extensively about personal finance. He and his wife (also a Navy veteran) live in Hawaii. Doug has written a number of books on financial education for military families, the profits from which he donates to military charities. After years of being asked what he and his wife had taught their daughter about finances, he decided to ask his daughter, Carol Pittner, what she remembered about them teaching her to manage her money.
“As a parent, the last thing you want to do is admit your flaws to your kid,” says Doug. Carol says: “Ask yourself, how do I wish I would have been taught?”
For Carol’s parents, Doug and Marge, it was about making the most of teachable moments in age-appropriate ways. If Carol showed interest in anything with a financial angle, they talked about it. For birthdays and other milestones, they worked out in advance how to approach the opportunity.
Allowances and Chores
Not every family will provide allowances, but if you decide you want to, how do you figure out the process for an allowance? Doug says:
“An allowance is a way to put money into your child’s hand, buy what they need, some of what they want, and the opportunity for teachable moments.”
As Carol grew up, she could choose age-appropriate job offers from her parents to save up for items she wanted. Some jobs turned out to be very useful during her own service and life now as a veteran, military spouse and mom: painting walls, unclogging hair from drains, and yard work.
Doug explains that the motivation for an allowance was about providing opportunities for Carol to succeed and to make mistakes when the stakes are low: “When you start teaching them at a young age, though, their mistakes are a lot smaller (and cheaper) than years later when they’re in the workforce.” Nordman and Pittner are firm about not prescribing the ages for different types of tasks or allowance levels: “Every family is different and every child is different,” says Carol, which is why she advises: “Go at your own kid’s pace.” She offered advice for military families as they move around to new places.
“Take advantage of traveling. Learning as you move around—pointing out when your finances are squared away. The whole idea is choices—it isn’t about staying only in a military career, or working in the same career for years. The better choices you make and the sooner you make them, the more choices you have.”
When asked what he would do differently if Carol were a teenager now, Doug said they would leverage cell phones as a tool for family communication and financial education. He also mentioned that they would probably employ a family oriented debit card, like FamZoo.
Reflecting on Being a Military Kid
One of the things you can do is reflect on the money lessons your own family taught you. Carol admitted to being amazed that her parents bought houses at their duty stations as a dual-military couple: “I don’t know how they had time to make that happen.” When asked about the money mistakes she saw her parents make and whether she thought she could avoid those, Carol argues that we have many more informational resources than her parents did:
“Many of the mistakes mom and dad made happened because the internet didn’t exist. Stock trading for individuals—what I learned was to buy an ETF and mutual fund—and let it do all the work for you. Let passive investing do all the work.”
Doug Nordman and Carol Pittner’s book, “Raising Your Money-Savvy Family For Next-Generation Financial Independence” will help you learn how to validate your children’s feelings about money, talk through their mistakes, and think of better ways to manage their money the next time.
Preschool and Early Elementary (7 & Under)
- Talk about saving for a vacation, sharing with others, and choosing what to spend money on.
- Give them a calculator to use while shopping to add up the items in the cart.
- Use a piggy bank and periodically open it and take them to the bank to deposit its contents.
- Play games.
Harvest Time (Family Pastimes Cooperative Games) Ages 3-7. A game for two to four players that encourages cooperation and collaboration. Also includes rules for a harder version of the game once the initial version has been mastered. $14.99 Buy Here
Older Elementary & Tweens (8-12 years)
- Open a savings account with a bank
- Have them come shopping with you and calculate the best deal by weight/unit• Foundations in Personal Finance: Middle School Edition (aligned with the National Standards for Financial Literacy).
Teens (13+ years)
- Foundations in Personal Finance: High School Edition (aligned with the National Standards for Financial Literacy).
- Open a Roth IRA when they start their first part-time job.
- Have them budget one week of grocery shopping for their family.
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A Quiz
In the S&P Global FinLit Survey, the literacy questions that measure the four fundamental concepts for financial decision-making—basic numeracy, interest compounding, inflation, and risk diversification—are as follows.
(You meet the threshold of financial literacy if you answer 3 of the five questions correctly)
1. Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments?
- a. one business or investment
- b. multiple businesses or investments
- c. don’t know
- d. refuse to answer
2. Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today?
- a. less
- b. the same
- c. more
- b. don’t know
- e. refused to answer
3. Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US dollars or 100 US dollars plus 3% interest?
- a. 105 US dollars
- b. 100 US dollars plus 3%
- c. don’t know
- d. refused to answer
4. Suppose you put money in the bank for two years and the bank agrees to add 15% per year to your account. Will the bank add more money to your account the second year than it did the first year, or will it add the same amount of money both years?
- a. more
- b. the same
- c. don’t know
- d. refused to answer
5. Suppose you had 100 US dollars in a savings account and the bank adds 10% per year to the account. How much money would you have in the account after five years if you did not remove any money from the account?
- a. more than 150 dollars
- b. exactly 150 dollars
- c. less than 150 dollars
- d. don’t know
- e. refused to answer
Answers:
- 1) b, multiple businesses or investments
- 2) b, the same
- 3) b, 100 US dollars plus 3%
- 4) a, more
- 5) a, more than 150 dollars