A $20 bill tests your kids' money skills (and your parenting)

To say my priorities have shifted is an understatement. I’ve lived roughly 18 adult years, and what I care about now couldn’t be any more different than the stuff I cared about at the beginning of my adult life. And because my priorities have shifted, my financial behavior and actions have had to shift, too.

Before I had children, my Sunday afternoons in the fall were spent either at a giant football stadium or watching every football game on TV. My priority at the time, which consumed both my time and my money, was pure entertainment. My priorities have shifted. Now that I have children, I don’t have time on Sunday afternoons for expensive leisure, but I don't lose sleep over that, because I have a new obsession.

My current personal obsession is twofold. First, I want to fully fund my kids’ college education. My other priority is to raise financially independent children, just as my parents and in-laws did.

According to my email inbox over the last several weeks, there are hundreds of reasons why children can’t be independent today. I don’t really care to debate these points. All I know is that every day of my life I see people take personal responsibility for themselves. My goal is to raise two of those people.

An open letter to parents who financially support adult children

How can we ensure our children don’t become a financial burden? I ask myself this question on a regular basis. I don’t just want to raise independent children for my sake, but their sake, too. I want them to have the financial skills, and more important the character, to thrive as individual financial entities. My kids are 7 and 4, and I’m already at full throttle.

Here is my plan to help create financially responsible children. The first task was to evaluate how I've done so far. I needed to know how my kids are wired, when it comes to their relationship with money.  I tripped over a fun/terrifying litmus test the other day, and it was the perfect method for assessing our current state of being. The test cost me $20. You should try it, too.

Offer your child $20. Give them two choices. They can either use the money to buy whatever they want for themselves. Or they can use the Andrew Jackson to provide meals for children whose parents don’t have the means to buy food. Your child will either get a $20 bill, or you will jump online to a local charity’s website and drop $20 in their coffers.

If you’re like me, the anxiety surrounding this litmus test is palpable. I didn’t want to fail the test. Notice I didn’t say I didn’t want my daughter to fail. The inquisitor is the one being tested. Because if the child takes the money, you know where they learned that from. As far as I’m concerned, this experiment works for children of all ages, even adult children. You just have to move the dollar amount up when appropriate.

Dear adults who mooch off parents: Grow up

In my case, my daughter didn't hesitate and said lunch for kids. Although I exhaled with relief, I know that my work isn't even close to done. The fact I didn't know what she was going to say only proves how difficult our jobs as parents is.

Unless you want your children to have an awful relationship with money, you must proactively search out opportunities to show them what healthy financial decisions look like. And more important, they must understand that money is only a renewable resource if you have the skills to create it.

That’s why they’re in the lemonade business. My children do at least one lemonade stand per summer. A lemonade stand shows a kid that when life gives you lemons, make money. They donate some, save some and spend some. They learn about start-up costs, marketing, inventory and customer service and have a great time.

Finally, I embrace the phrase “We can’t afford it.”  They need to learn that sometimes stuff they want isn’t affordable, that money is finite.

The older I get, the more I realize how little I know. Every moment I feel like I’ve got a grasp on parenting and teaching my kids personal responsibility, a new challenge arises. I do know one thing for certain, though — you can’t teach your child personal responsibility by accident.

Peter Dunn is an author, speaker and radio host. Have a question about money for Pete the Planner? Email him at AskPete@petetheplanner.com