My son’s first credit lesson was inspired by a moment that millions of parents have experienced or will experience. It is a simple lesson, born of a simple request, but it is powerful and can have a lingering impact.
And there’s more good news: Anyone can do it.
Before I get to the lesson, let me set the scene:
My wife, 9-year-old son and I are at our neighborhood Target. Like many busy families with young kids, we’re there all the time, for any number of reasons. As we always do, my son and I ended up in the section of Target where trading cards are sold. My son’s two passions are sports and Pokemon, so no trip to Target is complete without a visit to this aisle. Inevitably, one question soon follows:
“Dad, can we buy some?”
The answer is pretty much always no. However, sometimes my son will ask again, adding that he can pay us back with his own money. He’s got some cash in his piggy bank, thanks to the Tooth Fairy, generous grandparents who might give him a $5 bill at the end of a trip and other such phenomena, so he can afford to spend $2 to $3 on cards every so often. Even so, the answer is typically still no.
“Save that money for something bigger or more meaningful,” we’ll say. “Don’t just spend it on a bunch of cards.”
Every once in a while, however, I say yes, and that was one of those days. So my son grabbed his pack of Pokemon cards, I paid for it and we left.
“Don’t forget to pay me when we get home, please,” I said.
“I will.”
Invariably, though, time passes and he forgets. He’s not ducking me on purpose; he’s just a little boy with other things on his mind. It happens all the time, and it did on this day, too. I wasn’t upset about it, but I sensed a teachable moment.
Here’s where the lesson comes in…
I wrote him a note and signed it. The note basically said he had two weeks from that day to give me the money he had promised me. If he didn’t pay on time, he’d owe me an extra 25 cents for every week that passed before he paid. Simple. Then I approached him.
After telling him that I wasn’t at all angry or upset with him, I handed him the note and told him this is very similar to what banks make grown-ups do. I didn’t use big terms like grace periods, interest rates or payment schedules — I just kept it as simple as possible. I also told him that I wouldn’t mention what he owed again until the deadline date because it was his responsibility to make sure that he remembered.
I was a bit nervous about how he’d react, but he was fine. There was no crying or whining about fairness, no complaints about high costs or lack of trust. He simply walked to his room, got the money out of his piggy bank, gave it to me and went about his business.
A few weeks later, I gave in at the card aisle again, and again, he forgot to pay me back. That time, I didn’t even get through writing out the note before he saw me and went off to get the money.
It’s just a matter of time before this scenario plays out again, and I’ll do things the same way. Hopefully, it will teach him a fundamental truth about money: When you owe someone money, you must pay the person back, and the longer it takes you, the more you will have to pay. I’m sure he’ll slip up a few times over the years, but that could ultimately prove to be a good thing. After all, you often learn more from your mistakes than your successes.
You are still dealing with a kid, however, so it’s important to keep a few things in mind when you’re enacting your plan:
1. Don’t be a jerk. Remember, you’re trying to teach your kids, not fleece them. Don’t charge your kids $5 a week extra if they don’t pay you back for that $3 Pokemon pack. A dime or a quarter a week will get the point across without being mean.
2. Be consistent. Kids are forgetful, scattered creatures. They learn through consistent repetition. Stick with your plan every time, and the message will get through.
3. Remember praise. OK, so banks don’t exactly say, “Great job!” when you pay your bills on time, but it’s OK to praise your little one when they live up to their commitments. They are your kids, after all, not your clients. And conversely, when they do miss a deadline, don’t make a huge deal of it. Just remind them of their commitment, and see how they react. It might be awkward the first few times you do it, but ideally, your child will learn, and those occasions will grow fewer and farther between.
More from U.S. News
12 Money-Saving Ideas for New Parents
7 Things You Didn’t Know About 529 Plans
What Your Child Should Know About Money By Key Ages
The Simple (But Effective) Way I Taught My Son About Credit originally appeared on usnews.com
