How to Coach Your Child’s Money Personality
Growing up, whenever I found something in the store I wanted, I anxiously convinced myself that I didn’t need it. The very idea of spending my precious “piggy bank money” made my palms sweaty. Any time I came into birthday or allowance money, it went directly into my piggy bank.
On the other hand, my brother could not wait to spend any money. When he did get money, it went directly into his pocket so he could spend it on our next shopping trip. He would walk down the aisles at any store trying to calculate how many different combinations of things he could buy to most closely add up to the amount in his pocket.
Just like my brother and I, different kids have different money personalities. While these personalities may change and evolve as they grow, it is important, as parents and adults, we recognize these different personalities so we can best teach kids how to think about money.
The Compulsive Saver
This is a child who won’t spend any money on any items they desire. This could manifest as anxiety about potential future spending, or they view money as a security blanket. Common traits within these young money savers are that they are anxious about any spending, they are financially responsible, and they can struggle to differentiate and prioritize.
When coaching a Compulsive Saver, it’s helpful to start encouraging smart spending. A great starting place is teaching them how to prioritize their needs and wants. When they’re ready to put the practice in action, they can use different saving accounts to put money towards different goals. A great way to do this is by using the Saving Jars feature on the Guardian Savings app. The easy-to-use jars allow kids to save towards goals that they set and easily see their progress.
The Compulsive Spender
The Compulsive Spender is a child that has to spend money as soon as they get it, or the child who sees something they like and immediately has to have it. This money personality usually has a “burn a hole in my pocket” mentality that could be caused by impulsive spending or emotional shopping.
When coaching a Compulsive Spender it’s helpful to scaffold them through concrete budgets. This could start with a parent or adult dictating the dollar amount or percentage of their money they are allowed to spend per month. As they start to get better at budgeting and saving, revisit their savings target together with the ultimate goal of eventually giving them independent control.
Adults can also encourage smart spending by implementing rules that decrease impulsivity. For example, the “2-Day Rule,” requires kids to wait two days before they buy something. If they still want to buy it after two days of reflection, then they are allowed to. It’s important to encourage reflection both before and after the purchase so kids can build the habit of removing their emotions from decision.
The Saver-Spender
The Saver-Spender is a child who has saved their money all year just to impulsively spend it on something they see and want in the moment. The biggest indicator of this personality trait is that it is cyclical - children who fall into this category often follow a pattern.
This personality may be harder to coach because it has habits of both Compulsive Savers and Compulsive Spenders. The best way to support a saver-spender is through instruction - making sure they have a deeper understanding of their money and smart financial habits. The best way to do this is by teaching and modeling evaluative language, needs vs wants, opportunity cost, and budgeting.
The Indifferent-to-Money
The Indifferent to Money personality is a child who has seldom had to spend their own money to get things they want. These children often have a lack of interest in money and don’t have a strong understanding of money or worth.
Instead of bearing the weight of all purchasing, allocate a certain amount of money towards your child’s allowance. Rather than buying everything for your child, encourage them to use some of their own money so they can understand the importance of their money and purchases. They can earn their money through tangible efforts - chores, reaching communal goals, etc - and use it toward things they want to purchase. By using the Guardian Savings app, kids can monitor their savings progress and easily spend their own money rather than having adults buy things for them.
Conclusion
Understanding kids’ different money personalities gives us a better way to support them as they grow into financially responsible adults. The more tools we can give them that are responsive to their money habits, the better we can equip them for their future. Keep in mind money personalities change and evolve, and it’s important to be able to recognize them and coach them accordingly!
About the Author
Annie Gibson is an elementary school teacher from Indianapolis. She’s passionate about life-long learning and giving youth the learning foundations they need to be good community members and succeed in life.