Helping Children Learn about Money

In our culture, money has three distinct purposes: spending, saving, and sharing. I encourage you to work with your children individually to develop their own personal goals and positive experience around money. This is particularly important when you are going through a divorce as money pressures typically are felt by all members of the family, especially children during this time.

If you have gone through a divorce I am sure there have been strong emotions and insecurities felt around money. If you have these feelings, so do your children. If your children have not lived where a family money management system is already in place, there will be uncertainty, manipulation, and stress.

Let me give you a typical example. You have been married for 18 years and have 3 children ages 16, 13, and 6. You work part time as a teacher having returned to the work place 2 years ago. Your husband is the primary earner; he travels 50% of the time and manages the investments. He deposits his check into the joint checking account and you pay the monthly bills. He manages and pays his credit card monthly and you pay the one used by the family. Money is getting tighter and that is one reason you have returned to work. You have savings primarily in the equity in your house and retirement accounts. You completed a major remodel on the house last year and took out an equity line of credit. The children do not get an allowance per se, but are active in school sports and clubs and attend private schools.

Now you are getting a divorce. You separate and he moves into an apartment – not a one bedroom walk up, rather a 3 bedroom apartment in the city, away from the suburbs where you now live. He wants to have the children visit every other weekend and stay with him one night a week. You are feeling overwhelmed, depressed and starting to get angry. He agrees to continue to deposit his paycheck into the joint account, but there is not enough money to cover 2 households. He starts to take money from your savings/investment accounts and you are using your credit card more while attorneys and experts are costing money as well.

What about the children? They still want to maintain their activities as before the divorce filing, maybe even more money. Your 16 year old son wants a car, which means insurance and gas money. Your husband decides that you are now spending too much money. He doesn’t necessarily know where the money is going. Neither of you have maintained bookkeeping records of your spending. As a critical step in the divorce process your financial advisor has you detail an historical spending history and quantify the expenses during separation. You are categorizing and dissecting your finances for the past 2 years. See Chapter 7 in ”Fair Share Divorce;” this chapter will tell you how to get organized to do this work.

So what about the children? You will need to talk with them about how your lifestyle will change. Everyone’s life is going to change. Suddenly the children are being put on a budget. There is less money for new clothes; attending professional sports games is out of the question; stopping for an afternoon snack with friends is all but eliminated. They will take their school lunch rather than eating in the cafeteria. You will pay an allowance to the children and have them help around the home with the cleaning and yard work. This is not sounding like much fun for you or your children. They may get angry; it feels like they are taking it out on you. Meanwhile your husband is maintaining his life away from the family. He seems to be traveling more, seeing the children and taking them to dinner during the week, going on camping trips with them on the weekends or going to movies. Suddenly, you are feeling like the housekeeper maintaining the home, but finding less joy and more hostility, while your husband is playing the “Super Dad” role. Your 16 year old son even begins threatening to move in with Dad.

The first impulse is to try and keep up with Dad and increase your spending – just put it on a credit card – and use either more or less money on yourself. Clients usually go to one extreme or the other.

What can you do to take control of your situation? Sit down with your children and openly talk with them about the family money situation. Tell them how much money is coming into the household and from what sources. Identify the fixed expenses, including mortgage payment(s), insurance, taxes, utilities, phone and then quantify the discretionary expenses. Create categories for each of the members in the household. Everyone has discretionary money to spend – their “Don’t Ask” fund as well as entertainment, school, eating out, videos, movies, etc. Give each child envelopes and a label for each category. They put money into these envelopes each month, and when the envelope is empty, they are out of money for that category or they will need to move funds from one envelope to the other. They can increase their discretionary money by getting a part time job, helping a neighbor, or doing chores for example.

I did not say the children will be happy with this system. They aren’t going to like the the emotional upheaval and uncertainty that divorce brings to a family. And the last thing you want to happen is for you and your spouse to start competing around money with the children – one spouse spending money for the “fun” while the other person is trying to maintain the family home lifestyle.

Ideally, you have been working with your children in this money area long before the divorce. An excellent system to use when trying to teach your children about money begins early. The system uses what is called Moonjar Money Boxes. Go to their website and learn more at or call 1-800-323-0001. You should have 1 money box for each child, and the box includes sections for Spending, Saving and Sharing. This will provide some structure, stimulate communication, and allow you to have some fun together as a family.

Get your moonjars today and start, the sooner the better. Your teenagers may balk, but tell them attendance and involvement at these family meetings is a requirement. In time, they will respect you for teaching them about money management.

Additional budgeting information can be found in my book, ”Fair Share Divorce.”

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