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  • Writer's pictureJulia Brady

Finance 101

When Will was 5 years old he announced that he wanted to build a clubhouse in the backyard to use as his toy store. I was intrigued. We were only a few minutes into a twenty-minute drive to pick up his brother, so I started asking about his business. Will had quickly devised a way to have 100% margin on all sales. His plan was to get his friends to donate unwanted toys, and he would sell each one for “A buck, or maybe just a dollar.” When I probed what was in it for his friends giving him toys, he was at a loss.

While this entrepreneurial vision of Will’s was never realized, it was a good segue to discuss some financial concepts with him. As soon as my boys became old enough to realize that a thing called “money” was what is needed to buy stuff like candy and toys, they were hooked. Their dad and I explored ways to help them understand the concept of money and encouraged them to take some accountability for certain purchases by establishing an allowance from an early age. However, financial literacy for kids is a complex subject, a topic I recently had the opportunity to discuss with Aaron Ammerman, Founding Partner at Kentucky based Alpha Financial Partners.(

Focus on the Basics

Aaron has more than twenty years of financial planning and advising experience and has been a partner to my family for well over a decade. Not only has Aaron helped my parents, and now my siblings and me on retirement investment decisions, he’s a highly involved parent of a 14-year-old son. When I discussed with Aaron his approach to building financial literacy as this is a topic that comes up with clients who are parents, he says he encourages attention to a couple of things, “First, it’s important to focus on the basics of financial literacy, what things cost, what is a checking account and a debit card.” He went on to say that most kids aren’t taught this, or any knowledge of how to do things correctly when it comes to spending or saving money.

In terms of allowance, Aaron is in favor of that too, and he makes it clear that his son has jobs to do, a means of teaching responsibility within the home. He shared a great way to track chores, use a dry erase board in the kitchen where parents can write out to-dos, and kids can check them off when complete. As Aaron put it, “I have a very reliable child, but he’s also a 14-year-old boy and things slip his mind.” He also likes how it diffuses the tension associated with frequent reminders or claims of, “You never told me I had to _________!

[fill in the blank with least favorite chore]”

Aaron shared one way to expose kids to financial concepts is to involve them with everyday shopping, what he described as good “teachable moments.” Aaron went on to say, “When shopping for pet food with my son I have him look at price per ounce instead of just the list price. That way he can see what looks like a good deal maybe isn’t one.” Aaron also discusses with his son ways to recognize when he’s being marketed to. Starting to comprehend what really is a need versus just a want. Something we struggle with in my own house.

Linking Finances and Values

As noted in my last post, living in a world with endless streaming videos and social media showcasing others’ wealth makes it challenging to raise kids with a healthy financial mindset. Aaron said of his own household, “I navigate this age of comparison by teaching my son to value experiences over things. We’ve had memorable trips backpacking, visits to see family and a vacation to London.” All things that hard work and savings made possible, but so did valuing shared memories.

As my own two sons have an ever-growing list of wants, I actively involve them in budgeting and at times require they use some of their own money to purchase something big. Last June it was the PS4. We went in on it 50/50 and paid cash so they could hand over wads of bills to the clerk, feeling pride in the purchase while gaining a better understanding of the magnitude of the investment. A December 2019 article in CNBC on top money lessons for children reiterates how empowering making a purchase transaction can be for a young child.

We first introduced the concept of spending money to the boys when traveling. While it can be hard to watch your child squander their entire vacation budget on candy or Pokemon cards they quickly forget about, its all part of the journey to financial wisdom. With any luck, over time they start to pick out souvenirs that will be treasured long after the suitcases have been put away and candy eaten.

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