Found Money

At one of my recent workshops, an attendee asked “What should we do when my daughter receives a check for her birthday from her grandparents? We want her to put the money in her savings account and she wants to spend it all!”

This is a great question because your kids and teens will need to know how to handle a “windfall.”

While we all dream of winning the lottery, there will be times as an adult when we receive a larger-than-normal lump sum of money such as an inheritance, a bonus at work, a sale of our business or maybe a lawsuit settlement. What we do with “found money” can sometimes be the difference between financial stability and financial trouble.

First, before your kids and teens receive any large amounts of money its best to talk about what they would do with a large money gift. To get the discussion going, ask these types of questions:

“If you found $100 on the ground and you had to spend it now on anything you want, what would you spend it on?”

• Let them take the time to “dream” about what they would spend the money on – toys, electronics, clothing, concert tickets. You can vary the amount of money they find – what if the amount was $1,000 or even $10,000?

“If you were given $100 and were told that you couldn’t spend it on yourself, who would you give the money to and why?

• This is a great way for them to think about other people and causes that they care about. Maybe they will discover that animals or the environment are important to them. If they don’t have any ideas, help them research charitable organizations on-line. Once again, you can vary the amount of money they are given – what if the amount was $1,000 or $10,000?

Now that your kids and teens have thought about found money – help them set guidelines for when they receive a birthday, holiday or graduation check.

Each time they receive a windfall, they should decide on how much they will spend now, how much to save for later, and how much they might want to share. These are the same categories they use for their allowance, but they might decide on a different split for the windfall.

Each windfall will be a different amount and may come at random times so it is important that they learn to assess their financial situation at the time of the windfall so they can make the best decision based on their current situation. For younger kids this will not be as obvious as for a teen who may be saving up for a car, a summer trip or even college expenses.

So now that your kids and teens have set the rules on spending, saving, and sharing their found money - let the birthday checks pour in!