Pam Horack: A Candy-and-Cash Conundrum Led to a Lifelong Money Lesson

This special series is part of CentSai’s commitment to financial literacy at every level. We’re collaborating with financial-education advocate Sam X Renick (creator of Sammy Rabbit) on a series of short interviews, videos, and tips. CFP and “Your Financial Mom” Pam Horack tells Renick the most important money lesson she learned as a child and shares a tip for teaching kids about money.

Pam Horack’s Childhood Money Lesson

Sam X Renick: What is the most important money habit you learned as a child? Briefly share the story of how you learned the habit and what impact it has had on you throughout your life.

Pam Horack: When I was a kid, I spent about $10 at the drugstore on candy. You know, bubble-gum cigars, ring pops, Lik-a-Stix, and stuff like that. When I got home, it dawned on me I didn’t have any money left, but I did have a pile of candy I really wasn’t too excited about.

So I set up a “store” in my front yard to try to sell the candy and make my money back. I sold a couple of things, but not much.

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I realized then I needed to do a better job of thinking about my purchases and not get overly emotional when buying things. Had I been more thoughtful, I would have had candy that I really enjoyed and some money in the bank.

The Most Important Money Lesson to Teach Kids

Renick: If you could teach a child only one money habit, what would it be? Briefly explain why.

Horack: I want all kids to learn to save. I have two boys who are as different as night and day. One is definitely a saver, and the other a spender. However, I put parameters in place to help both of them. They each have envelopes for “giving,” “saving,” and “spending.”

This allows them to save for the future and still having money to spend on fun stuff. Now my little one can buy what he wants and has money set aside for another day, while my older one can choose to save his spending money if he wants. They have choices.

A Final Thought: What if the Research Is Wrong?

Renick: Cambridge University research indicates that adult money habits are set by age 7. What if the research is wrong and adult money habits are formed earlier, perhaps around the age the “give mes” set in? What does this mean for families, schools, and the field of financial education?

Horack: Children generally learn very little about money in school or through the financial industry. These groups can continue to help kids learn through games, stories, and hands-on activities, such as Junior Achievement programs.

If money habits are formed at a very early age, then we as parents are the frontline advisers.

Children will do what we do, so our actions and words are important. We can help our kids by changing our vocabulary around spending. When a child asks, “Can I have this?” instead of saying, “No, we can’t afford it,” we should say, “No, it’s not in the budget.”

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This simple word shift changes our meaning so we don’t scare children into thinking that the family is broke. And kids are smart. They see us purchase things that we don’t need all the time, so they don’t believe that we can’t afford things.

Using the word “budget” implies that they need to think about what they really want to spend their money on. If it’s truly important, we can put it in the budget for another day. Although they will probably forget about the request, they learn there is money available for thoughtful purchases.

Discover more about Pam Horack at Pathfinder Planning LLC.