Calm/Assertive Parenting Procedure (CAPP): How to Train Your Kid to Value and Save Money

 

Reminder:

Calm/Assertive Procedures like this one give kids two choices and two choices only. Kids can either:

  1. Be cooperative

or

  1. Suffer the consequences of not being cooperative

Either way, we can be calm and empathetic because we do not allow this third option to exist:

  1. Do whatever you want, develop bad behaviors, and become a person people don’t want to be around

The possibility of allowing choice C is what makes us angry, excitable, and sometimes irate because we love our kids and we know where kids who get to use choice C often end up.

Calm/Assertive Parenting Procedures like this one take into account all possible ways that kids will try to get to choice C. We stop those channels to C and reroute back to either choice A or B. We do this all without ever trying to control that which we cannot control.

 

Here We Go…

Most parents use the “Hope and Pray” model for getting their kids to value and save money. They don’t give their kids an opportunity to practice with money until their teen years (if even then), or they create contrived experiences with money that teach very little or nothing in the way of real-world lessons about how money works. Then, the parents just hope and pray that their kid will somehow learn to value and save money.

This CAPP is unique in that it does not involve logical consequences that are created by the parent. Instead, it shows the parent how to stay out of the way so that the universe can give your kid natural consequences. Still, staying out of the way can be challenging, so detailed instructions are included below.

What Not to Do

Don’t force your kid to save money.

Don’t lecture your kids about the value of money.

Don’t warn your kids about spending too much money.

Don’t pay your kids for doing chores.

Don’t allow your kids to buy anything that might hurt them, according to your values. Do you believe that sugar or violent video games can hurt your kid? Then they are not allowed to buy Twizzlers and Grand Theft Auto, period and end of sentence.

Don’t regularly buy your kids anything besides the food and clothes that you want to buy them, some presents on their birthday and holidays celebrated in your household, and one activity per season (soccer, dance, etc.) if you value your kids participating in these activities. This includes major purchases such as cars and college. See the paragraph about unfairly expensive purchases below.

Don’t buy things for your kids when they ask for something at a store, unless it is food or clothes that you would like to buy them.

 

What to Do: Setting the Limit

If you have had power struggles with your kid in the past about money, apologize for nagging and assure them that this won’t happen again. Let them know that from now on, their money is theirs and they can use it in any way that will not hurt them, according to your values (see above). They can also save it if they choose to. Let them know only one time that if they want nice, really cool things, they can save in order to buy them, or they can buy lots of cheap things all the time. It’s all up to them.

Let them know that from now on, they will be given money every week, one dollar for every year that they have been on earth: four-year-olds get four dollars a week, seventeen-year-olds get seventeen dollars a week. This can start on a kid’s third birthday. Let them know that this is not tied to their chores. Chores are simply tasks completed by all members of the family to contribute to the well-being of the household. Use the following CAPP if chores are not completed to your satisfaction: Chores. Let them know that you will no longer be buying them things unless they fall into the above parameters, but that they can buy whatever they want for themselves, within the very minimal limits previously described.

Therefore, the amount of money that you kid makes will go up one dollar per week until their 18th birthday, at which point, they will get exactly 0 dollars per week from you. If your kid will still be in high school when they turn 18, you can extend the end of the weekly allowance until the day they graduate from high school.

Depending on your kids’ age and your own financial literacy, you can get them savings and checking accounts, you can teach them about compounding interest, etcetera. Just fight the urge to nag (remember, you promised) about their current behavior with money.

When you feel it is developmentally appropriate, let them know about how you are willing to help out with unfairly expensive purchases. Let them know that there are two things in particular that teenagers often want to purchase that are unfairly priced: cars and college educations. The reason for this is that many parents decide that they will purchase these things for their kids. Let your kid know that you won’t be doing this, but that it is also not really fair to expect kids to buy these things on their own, since the prices on these items are unfairly inflated.

Let your kids know that you will help them to purchase these items by contributing a certain amount of money for every dollar that your kid contributes. For example, for every dollar my daughter saves for her first car, my wife and I will contribute three dollars. For every dollar my daughter puts towards college, my wife and I will contribute five dollars. Letting your kid know about this arrangement at the right time is important. It needs to be late enough so that they can understand the math involved, but early enough so that they can have enough time to save if they choose to save.

The number of dollars that you contribute for every dollar that they contribute will be determined by many factors: How much do you value your kid driving? Do you want them to be able to drive? Can you afford to help them with getting a car? Can you afford to help them pay for college? How much do you value a college education? Will the price of college go up in the future? Will the college bubble burst and will the price of college be significantly lower in the future?

For example, at the age of seven, my daughter knows that for every dollar she puts towards a car, my wife and I will give her three dollars (gas and insurance not included). For college, she knows that she will get five dollars for every dollar she puts toward her education. Room and board are a part of the 5:1 deal. Unfairly Expensive Purchase help on cars should expire on your kid’s eighteenth birthday. Unfairly Expensive Purchase help for college should be available as long as you think that it should be available, but these time parameters should be discussed during the kid’s Junior year of high school.

 

What to Do: Interventions: Set #1: Questions

Instead of warning, lecturing, and nagging, you can very gently guide your kid towards your perception of using and saving money in a healthy way.

WARNING: The use of these small questions will not guarantee that your kid will use money in a way that is consistent with your values. These questions are interventions. Interventions don’t guarantee that we will get the behavior we want. They merely stimulate thinking so that your kid is more likely to ask herself what they best choice would be.

Setting up the limits correctly and then allowing the natural consequences of the universe to teach your kid hard lessons about money is how kids will really learn lessons. Feel free to use any or all of these questions when kids are about to purchase something that may not be a good use of funds, in your estimation.

“How much is that?”

“Is that worth the money?”

“Do you think you will still like that in a week?”

If your kid says “yes,” say nothing else, but feel free to keep a concerned look on your face.

Once your kid has already bought something, you may want to ask,

“Was that a good purchase?”

When he says yes, allow yourself to simply say the following, and nothing else:

“Yikes.”

What to Do: Interventions: Set #2: Empathize with Consumer Failure

Invariably, if your kid is never saving money and is buying cheap things over and over again, those things will break and/or be disappointing in their performance. When this happens, fight with all of your might the urge to say, “I told you so.”

Instead, be sad about your kid’s failure as a consumer. Not lecturing about it and just being sad will allow your kid the time and emotional space to think about his mistake and whether or not he should repeat that mistake. If you get angry and/or lecture him, he is likely to put his anger on his mean parent instead of on himself for buying a piece of junk for weeks’ worth of allowance.

What to Do: The Consequence

As previously stated, this CAPP is unique in that it involves no logical consequences created by parents. This CAPP is solely dependent upon the natural consequences involved with using money poorly. All of the necessary consequences for poor money management are doled out by the universe. Again, the key is to stay out of the way and let the universe teach your kid. Remember, if you involve yourself in this, your kid might have to put her anger for her bad financial choice on you instead of on herself.

You have set up your kid’s world so that they can get the benefits of the universe’s instruction. By allowing your kid to buy nearly everything that they have, you allow them to start learning lessons immediately through consequences.

When a three-year-old buys a piece of junk at a carnival that costs a dollar and it breaks that night, they can learn a lesson about shiny cheap things.

When an eight-year-old loses an entire weeks’ allowance to a claw machine, they learn that gambling may not be a good idea.

When a twelve-year old saves twenty dollars to buy something on the internet without adequately researching it, and it turns out to be a piece of junk, there is a good chance they will be a better consumer next time.

When a fourteen-year-old forgets their money at home, they go to a mall, and they can’t buy something they want, they learn to remember to bring money next time.

As kids get older, they are constantly learning these lessons, as long as we follow the above instructions for giving kids the responsibility of having money and we don’t give them the false impression that their money, or lack of it, is our problem.

As long as kids keep learning these lessons, they are very likely to have learned the necessary lessons to be able to make good choices about money in their teens, like saving for college and a car, or rent money when they turn eighteen. If they have not learned the lessons about these major financial matters, they will learn them at this later age– the hard way:

A sixteen-year-old who has not saved any money for a car will not have a car. He will learn about the benefits of car ownership by not having one.

An eighteen-year-old who has saved no money for college will not be able to go to college. She will learn about the importance of college by not going to college- yet. She has perhaps not yet learned the value of college, and what better way to learn the value of college than having to work at a job that does not require a college degree. Jobs like this often require a lot of work with little pay. She will now have to pay rent to live somewhere. This will further allow the universe to teach important lessons about money.

Notes:

• Using this procedure will allow kids to truly appreciate the benefits of having a job. Imagine the excitement of a sixteen-year-old who is used to having sixteen dollars a week when she learns that she can earn ten dollars an hour!

• Using this procedure in guiding your kid to purchase a car could save your kid’s life. They will be much more careful driving a car that they have (partially) paid for and paid the insurance for than they would be driving a car that has been gifted to them.

• The same is true for how hard your kid will work to earn college credits that they have used their own money to buy.