WNCPARENT

Savvy spending & saving: Teaching kids to manage money

Becky Johnson
WNC Parent contributor
Maddie and Brooke Baccarella,16-year-old twins in Asheville, have been managing their personal money portfolios since third grade using the simple Divvy method. The Divvy kit they're using — developed by their mom and a business partner — is no longer on the market, but you can replicate a DIY version with a shoe box and jars.

It’s never too late — or too early — to start teaching your kids money savvy.

Jon Corbin’s son was only 5 when the recession sent their family finances into a tailspin. But amid the stress, he had an epiphany.

“If I could go back and save 10 cents of every dollar I touched, I would have been in a much better position than I was in that moment,” said Corbin, owner of The Buyer’s Agent in Asheville.

He pledged to instill in his own kids what he’d learned the hard way.

“Whenever I made money as a kid I spent it, so that became my habit in life,” Corbin said. “My son had the benefit of not having any money habits at that point.”

So Corbin crafted a plan. He rounded up four jars and nested them into a shoebox. Using masking tape and a Sharpie, he labeled the jars “give, grow, plan and live.”

Whenever his son got money, they pulled out the box and divvied it up among the jars — whether it was a $50 birthday check or $2 from the tooth fairy.

With an old-fashioned piggy bank, money only goes two directions: in or out. Corbin’s jars-in-a-shoebox mimicked a financial portfolio, but in tangible terms a preschooler could grasp. “Grow” stood for investing, and “plan” for saving.

“I wanted them to learn those are actually two different things,” Corbin said.

Ten percent went in the “give, grow and plan” jars, and the other 70 percent went in the “live” jar for spending. Corbin coined the system “Divvy Up.”

“And they learned to do that from day one,” Corbin said of his kids, now 11 and 13. “We want to do everything we can to set our kids on the right foot.”

Corbin shared the idea with his friend Maureen Scullin, who decided to pilot the system with her 9-year-old twins. Now 16, her girls still use their box of jars.

“They still divvy, every bit of money they get,” said Scullin, of Asheville, who works in business relations for Pardee Hospital. “When they go on in their life, they are so much better prepared than any of us were. They value money and are very smart shoppers.”

Scullin discovered kids are far more thrifty when their own money’s on the line.

“If we’re buying tennis shoes and they say ‘Ooooh, I want those $80 pair of tennis shoes,’ but we’re only allowing $40 for tennis shoes and they have to pay for the difference, then it’s usually ‘Oh never mind I don’t want to do that,’” Scullin said.

The box of jars demystified the ethereal concept of saving.

“When they get older, apps could be used, but when they are young, the tactile experience of counting out money is important,” Scullin said.

Wanting to share the concept with the masses, Scullin and Corbin even developed a prototype of the Divvy Kits for market. They never launched large-scale production, but encourage other parents to make their own version.

Both parents attest the most rewarding thing for kids was picking charities for their give jar.

“They always really enjoy giving away their give jar,” Corbin said.

Bridging the gap

Kids typically don’t learn financial literacy in school. It falls on parents’ shoulders to teach sound money sense, and many fall short.

“When I was a teen, I wish somebody had told me these things,” said Maggie Leftwich, a career counselor with Goodwill Industries in Waynesville. “If you have a career but don’t know how to manage your money, you are going to keep ending up back in the hole.”

For Billy Cooper, a wealth management advisor with Northwest Mutual in Asheville, teaching his kids about money came second nature. After all, he’s made a career of helping people manage their money.

Cooper gave his children an allowance when they were as young as 7 — not as an indulgence, but to impart personal responsibility.

“They learned if you want to buy a pack of gum or a large soda at the movies when we’d only support a small soda, then that’s on you,” Cooper said.

The allowance was monthly — another intentional move.

“I wanted to teach them if they ran out in eight days they aren’t getting any more until the next month,” Cooper said. “Sometimes it is painful because I have to say ‘no,’ but as long as I am willing to dole it out they have no incentive to save.”

Learning to manage money from a young age proved invaluable as they got older.

“The things they want get bigger and bigger. The pack of gum turns into an iPhone and the iPhone turns into a iMac and the iMac turns into a new car,” Cooper said.

Cooper’s kids learned to set aside 10 percent of their allowance for God and 10 percent for savings, with the rest to use as they saw fit. His four kids — now ages 16 to 22 — have carried that philosophy into young adulthood.

“I think the value of having skin in the game cannot be underestimated,” Cooper said. “When I invested in my college, when I invested in my car, when I invested in a new pair of boots I wanted, they were much more valuable to me. I took care of them.”

Cracking the budget code

Today’s generation is once or twice removed from the drudgery of balancing a checkbook. The kitchen-table scene of our own youth — mom or dad hunkered over a mound of receipts and check stubs — is no more.

In the world of debit cards and instant online balances, the idea of tracking a budget manually has met its demise. And that’s part of the problem, Leftwich said.

“You don’t tangibly see the money you are spending. You just swipe and then your money is gone,” she said.

But it’s not entirely fair to blame kids.

“It doesn’t really get taught to us in school,” Leftwich said.

So she is trying to fill the gap. She developed a 90-minute crash course to introduce teens to being money savvy — walking them through the lost ritual of making a budget, tracking their spending and living within their means.

It can be eye-opening for teens to see how a Red Bull a few times a week adds up.

“Just because it’s $3, if you spend that every day, the next thing you know it is a 100 bucks,” Leftwich said.

Leftwich came up with the teen budgeting course last year in collaboration with a teacher at Pisgah High in Canton.

“Even if they just remember one or two things, my hope is some part of their life will be a little bit better,” Leftwich said.

Teach your kids dollars and cents

Kids often don’t learn about money and finance in school, so it’s on parents to teach them. Unsure where to start? Here’s a few online resources to help you dial in on the right approach for your family and improve your own budget savvy along the way.

  • The Mint: A one-stop-shop for interactive tools, worksheets and games that teach kids and teens about earning, spending and saving money, with a highly recommended section for parents packed with guidance and strategies to teach your kids about money. www.themint.org
  • Money Talks: Quality articles, quizzes, games and video geared for tweens and teens. moneytalks4teens.ucanr.edu
  • Biz Kid$: Online games and a heap of fun lesson plans on money topics you can do with your kid at home. bizkids.com
  • Money Trail. An online allowance and spending tracker for kids, teens and families. www.moneytrail.net
  • Seven Money Start Activities for Kids. An article by Asheville’s own William Cooper, a wealth management advisor with Northwest Mutual. www.billy-cooper.com/7Money-Smart-Activities-for-Kids.c4728.htm