Teaching Financial Common Sense

Fifth Grade “Entrepreneurs” at the BizTown Fundraiser in 2025

My first two posts in the new year addressed some recommendations on Resolutions, not only for you, but for your children and grandchildren. My first suggestion centered on the

importance of music, and the second on gardening. Catholic Schools Week and the Crusader Benefit posts interrupted my cycle, so today I conclude with my final bit of advice: Teach Financial Literacy.

In 1909, Merkel Landis, Treasurer of the Carlisle Trust Company in Pennsylvania, created a special type of savings account, known as a Christmas Club Account, which was designed to help individuals save money for holiday expenses. Customers would deposit money each week, and the funds would be disbursed on December 1, in time for holiday shopping. The small community bank in the Midwest where my father was employed offered these Christmas Club accounts as well, and one year, when I was in middle school, he funded an account in my name. I was to use the money -- I believe the balance was $50 -- to purchase Christmas gifts. There was one condition, however. I was expected to open my own Christmas Club Account the following year with a portion of the money I earned or received. That was my initiation into the world of finance, and it was an important lesson I have never forgotten.

A generation later, I tried something similar with my own children. In 1993, my husband was stationed on Iejima, a small island off the coast of Okinawa, and I homeschooled our sons, who were seven and nine at the time. For each lesson completed, they would earn points, and those points converted to a nominal amount of money (up to $1 per day, $5 per week, $20 per month). Once a month we would ferry across the East China Sea to the mainland and drive to one of the military bases where they could spend their allowance at the toy store. They learned two things: 1) hard work is rewarded, and 2) their purchases could not exceed what they had earned.

Both scenarios had the beginnings of a good financial education, but both were incomplete. I believe it is important to instill in children the following principals:

• Everyone in the family is expected to assist in the day-to-day tasks. Younger children can feed the dog, pick up their toys, or clear the table. Older children can help with the laundry, meal prep, and taking out the garbage. Children will feel a sense of pride when they contribute to the family unit.

• Any allowances earned or monetary gifts received should be put into three buckets: Savings (for long-term purchases or goals), Spending (for immediate wants), and Donations (stewardship is a tenet of our faith).

• Do not spend more than you have.

There are many resources available to assist parents and grandparents in this goal (see Amazon for books on finances, investing, and entrepreneurship for kids). We, of course, want our children to be happy, but extravagance and excess will likely do more harm than good. Teaching delayed gratification, a strong work ethic, and fiscal responsibility will set them up for success and satisfaction in the long run, but they need us to guide them on this path.

Deo Gratias, Kathy