What My Daughter’s First Babysitting Job Is Teaching Her About Money
As a financial planner, I spend a lot of time talking with families about saving, investing, budgeting, and building good financial habits. But some of my favorite money conversations happen at home.
This summer, my daughter started babysitting. Before she took her first job, she did the preparation. She completed a babysitting class, learned CPR and first aid, and started building relationships with families through her work as a swim team assistant with the younger kids on the team.
Then something exciting happened: she started getting paid.
Suddenly, the money conversations we had been having for years became much more real.
Earning Money Changes the Conversation
We have talked about money with our kids for a long time. We follow Dave Ramsey's concept of Give, Save, Spend, and my daughter had already been practicing it with the commissions she earned at home. We started with envelopes labeled with each category, then we opened bank accounts.
But babysitting was different.
This wasn't money from Mom and Dad. She had provided a service, taken on responsibility, and earned the money herself.
That sense of ownership matters.
As her babysitting income started adding up, we established a simple framework:
- 10% goes to giving
- 20% goes to saving
- 70% is available to spend
The percentages themselves aren't necessarily the most important part. What matters is creating the habit that every dollar has choices attached to it.
When she gets paid, we can talk about all three.
Who or what would you like to support with your giving?
What are you saving for?
And what do you want to do with the rest?
The "Spend" Category May Create the Best Conversations
As a parent and a financial planner, it can be tempting to tell a child exactly what to do with money. I'm trying not to do that. Once my daughter has given 10% and saved 20%, the remaining money is hers to spend.
That means she gets to make decisions.
Sometimes I might think something is a great purchase. Other times, I might think she is wasting her money. But allowing her to make some of those decisions creates an opportunity to learn.
Is this something you really want?
How many hours of babysitting did it take to earn enough to buy it?
Would you rather buy this today or save for something bigger?
Do you still want it after waiting a few days?
Those are the same tradeoffs adults make every day. I'd much rather have my daughter learn those lessons with $20, $50, or $100 today than encounter them for the first time with a credit card and a full-time paycheck years from now.
And importantly, spending isn't bad.
Money is also meant to be enjoyed. Teaching kids to manage money shouldn't make them afraid to spend it. The goal is to help them understand that spending is a choice and every choice has a tradeoff.
Teaching Money in a Digital World
The other interesting part of this experience has been figuring out how to teach money when so little money is actually physical anymore. When I was younger, getting paid often meant receiving cash. You could physically see your money, put some aside, spend some, and take some to the bank.
Today, a babysitter might get paid with cash one night and electronically the next. So we decided she should learn both worlds. She already had checking and savings accounts. As babysitting became more regular, we also set up a dedicated savings account at a local credit union.
There was a specific reason I wanted to do this.
I wanted her to walk into a bank with cash and make a deposit.
There is something valuable about physically taking money you earned, handing it to a teller, seeing it deposited into your account, and watching your savings balance grow. It's a simple experience, but it makes saving tangible. At the same time, we can't pretend it's 1995. She is growing up in an iPhone world.
We set up Apple Cash so she can participate in the digital economy she is actually going to live in. We also established an account at a large national bank where she can have online access and connect her debit card to Apple Wallet. Now the financial lessons can happen in both places.
She can walk into a credit union and deposit a $20 bill.
She can also open an app and see her account balance.
Both are opportunities to learn.
A Bank Account Isn't the Same as Financial Education
One thing this experience has reinforced for me is that simply opening a bank account for a child isn't enough. The account is the tool.
The conversations are the financial education.
When money comes in, talk about it.
When they want to buy something, talk about it.
When they decide not to buy something, talk about that too.
Show them what happens when they save consistently. Help them understand why we give. Explain why having money set aside provides options.
You don't need a spreadsheet or a complicated financial plan.
A $30 babysitting payment can become a financial planning exercise:
$3 to give.
$6 to save.
$21 to spend.
That's a pretty simple financial plan.
But repeated dozens or hundreds of times over a childhood, those decisions can become habits.
Give Kids Ownership... With Guardrails
One of the most important parts of teaching kids about money is giving them some ownership. If every decision is made for them, they aren't really learning how to make financial decisions.
Our approach is to provide the guardrails and then give our daughter room to operate inside them.
She has to give.
She has to save.
But she also gets money that is truly hers to spend.
As the amounts get larger, the conversations can grow with her.
Eventually, we can talk more about investing, compound growth, taxes, credit, charitable giving, college expenses, retirement accounts, and all the other financial decisions that come with adulthood. But we don't need to start there. We can start with babysitting money.
Parents: You Don't Need to Have It All Figured Out
If you're a parent and haven't started talking with your kids about money yet, don't worry about creating the perfect system.
Just start.
Kids can understand more about money than we sometimes give them credit for, especially when the lessons involve money they earned themselves.
And when they're young, money can actually be exciting.
Let them count it.
Let them deposit it.
Let them watch their savings grow.
Let them buy something you wouldn't buy.
Let them occasionally regret a purchase.
Then talk about it.
Our job as parents isn't to make every financial decision for our children. It's to give them a safe place to practice making those decisions themselves. There will be plenty of time later for conversations about mortgages, 401(k)s, taxes, investing, and retirement. For now, I'm happy talking about what happens to the next babysitting payment.
Give some. Save some. Spend some. Learn from all of it.
The amounts may be small today, but the habits can last a lifetime.
About Rigden Capital Strategies
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Disclosure: This content is for informational purposes only and does not constitute individualized investment advice. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. Consult a qualified financial professional before making any investment decisions. The examples discussed are personal experiences and are not intended to suggest that any particular budgeting method, account type, financial institution, or financial strategy is appropriate for every family. Parents should consider their family's circumstances and applicable account rules when making financial decisions for minor children.
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