Even 3-Year-Olds Know When You Owe Them


Perhaps we can all be grateful that toddlers aren’t professional debt collectors.

Hypothetically speaking, let’s say you’re in debt and someone sent a 3-year-old to your door. One glance at those large, innocent eyes looking up at you and asking you to settle up would probably send you running for your checkbook. I doubt you’d even attempt to negotiate your debt. You definitely wouldn’t slam any doors in their faces.

But watch out if a toddler ever wants to loan you something; you might just fall into accidental debt. A new study demonstrates that three-year-olds know when you owe them.

In order to get a true measure of indebtedness, a series of experiments was performed with resources a toddler might value most: stickers and toys. Markus Paulus at Ludwig-Maximilians-University of Munich, took three-year-olds and five-year-olds in groups ranging between 28 and 43 kids and had them participate in a sharing game. The toddlers were tested individually, and had to choose how many of their stickers they wanted to share with specific toy animals of different colors. The game was intentionally crafted so that the toddler would choose a favorite animal to share more stickers with. There were winners and losers. Sadly — if you can feel sorry for a toy — one toy animal only got one sticker or no stickers at all. Such is life.

Researchers leveled the toy animal playing field by showing the toddlers that each of the animals was actually IW (independently wealthy), with its own sticker collection. After adding them all up, kids were shown that each toy animal had the same number of stickers, so even the sad, disadvantaged animals balanced out to the same amount.

Then came time for payback. Suddenly, the toy animals were gifted with irresistible toys that would cause even the most disciplined three-year-olds to stop in their tracks, swoon and start to whine, er, pine — colorful balloons, oh-so-shiny marbles and coloring books graced each animal. Each animal had the same number and type of toys. For a few rounds, the toddlers were told to choose which animals they’d ask to share its alluring resources. Time and time again, the toddlers approached the animals to whom they had given the most stickers.

“At this age, expectations for reciprocity seem to develop, and these expectations start to affect children’s behavior,” Paulus told Credit.com.

If No One Sees It, It Never Happened

Interestingly, researchers then varied the study a little. This time, they had the animals leave the room before the toddlers decided how many stickers to share with each one. So, technically, the toy animals never “saw” when toddlers gave them preferential treatment or more stickers. But by age 3, their young minds already knew that a favor done without a happy recipient didn’t count in the favor bank. When it came time for the toddlers to hit up which animal they’d ask for toys, they no longer asked more from the animals to whom they’d given more stickers. They seemed to know the favor would never be recognized if it hadn’t been seen.

Why It Matters

“I think it really helps us to know how deeply wired we are for relatedness,” said child psychologist Dr. Bob Bartlett in White Plains, NY. From the moment a child is born, the little person relies on expectancies and patterns to navigate life, he said. Nursing mothers and their newborns often perform a “complicated dance” of relating and needing space through body posturing and eye contact, says Bartlett. “That becomes woven into the way we connect with other people as we go forward. So we’re really wired for a sense of expectancy.” Our first experiences of fairness and indebtedness shape our philosophies of meaningful relationships.

“From early on, our parents and caregivers help teach us what to expect from relationships — how sharing is undertaken, how others are thought about. They emerge and really take shape,” Bartlett continued. And we learn reciprocity as it is reinforced by our family and by larger communal settings such as preschool, he said.

It can be witnessed when a toddler’s sense of unfairness is spot on — as soon as they see another kid receive something they don’t have, says Dr. Bartlett. (Just hand an ice-cream cone to another toddler, and see what happens with yours.)  “Automatically a child will want what’s given to another,” Bartlett says. “It’s all based on our own need of wanting others to attend to us and give to us.”

And adorable toddlers certainly know how to gain credit in your heart.

Remember, modeling good financial habits can help your kids later in life. You can go here to learn about getting control of your money. And you can view a free snapshot of your credit report by enrolling in an account on Credit.com.

Image: Christopher Futcher

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Why We Decided Not to Have Kids


With the legalization of same-sex marriage, queer couples have been solidifying relationships as fast as they can say “I do.” However, queer couples have familial considerations that, until June 2015, were like AstroTurf to grass.

Having children is not easy, financially or emotionally, and for older couples, the financial and emotional burden may be hard to overcome. That’s why we decided not to have children. We made this choice not because we don’t like kids but because of the time and place in which we were born.

In part, because our relationship experiences were five to 10 years behind our straight peers, we settled down about 10 years later. When our relationship evolved to a point where we could think about supporting kids, we felt it was too late.

At the time, we already had $51,000 in credit card debt. We knew we needed to pay that off as quickly as possible and then focus on saving for retirement. We couldn’t do that to the degree we felt necessary while giving our kids the life we felt they deserved.

The Financial Costs of Kids

According to the U.S. Department of Agriculture, the average cost to raise a kid until 18 as of 2013, the most recent year for which data was available, was $245,340. When we considered these costs in addition to our credit card debt and retirement needs, we were overwhelmed.

And when we considered the Human Rights Campaign’s estimate that the cost for a gay couple to have a domestic adoption ranges between $5,000 and $40,000, the prospects of having kids seemed downright impossible — and even selfish. We didn’t feel we could give our kids the life they deserved without sacrificing our retirement. If we did the latter, we feared we’d be a burden if we got to a point where we could no longer care for ourselves.

The Emotional Costs of Kids

Had we been more emotionally and financially mature when we were younger, having kids may have been more viable. Having suffered our financial insecurity, we didn’t want to put ourselves in a precarious position again.

We’ve shared many times that one of our best financial decisions was figuring out what we most want in life. This gave us the focus to pay off our credit card debt and helped us stay out of it. One of those two wants is being prepared for retirement.

Knowing what we do now, we would be on an emotional roller coaster, stressed about our retirement, while raising our kids. The expectations (read: costs) for children are high in dwindling middle-class America. Our relatives once told us they spent $2,000 each on their two kids for six weeks of soccer camp. That doesn’t even factor in costs for the rest of that season or the fact that neither of those kids will ever become professional soccer players. Still very young, those kids will be lucky if they’re able to stay interested in soccer, much less good enough to receive a college scholarship.

Cynics will say we shouldn’t get caught up in the superficiality of raising kids today, but we know that’s easier said than done. It’s not socially acceptable to advise people to not have kids, and there’s often a stigma for couples who don’t. Some even make the decision not to have kids out to be selfish and self-serving.

For us, our concern was exacerbating the financial mistakes we made in our younger years and being a burden on our kids. When deciding whether or not to have kids, it’s important to remember your kids’ whole life — not just the day the stork brings them home.

[Editor’s Note: You can monitor your financial goals, like building a good credit score, each month on Credit.com.]

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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Image Courtesy of David Auten & John Schneider

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3 Money Lessons Your Kids Should Learn Before High School


With three kids (one on the way — we adopted), and a couple of businesses, we’re quite the busy parents. Perhaps you can relate.

But no parent should be too busy to teach their children about money. Proper money management is an important skill to learn growing up, and if you think the education system is going to teach them everything they need to know, think again. Many of our schools don’t teach kids about money. Parents might not realize this, and they should so they can fill the gap.

There are a few financial lessons every parent should teach their kids before high school. If you have kids, which of these lessons are you currently teaching them?

1. Give Freely

It’s a simple but powerful lesson. Chick Moorman and Thomas Haller, for Parents.com, listed several ways children can learn to give: donating clothes, helping neighbors, creating a charity jar, and more.

Imagine for a moment that everyone gave to others in need out of their own free will. Imagine the kind of place the world would be. Imagine the people who wouldn’t go hungry, the lives that would be saved, and the relationships that would be formed.

There’s nothing wrong with working toward that ideal even if we know it will never be fully achieved. And, curiously, giving accomplishes so much for the giver just as it does for the receiver.

By teaching our children to give, we show them how to be content with what we have. Contentment is one of the best qualities of the finest people, but it’s also one of the most difficult qualities to acquire. That’s why it’s so important to teach our children how to give when they’re young.

Contentment goes a long way in someone’s financial life. It allows them to spend less on things that don’t matter and focus more on the important things in life: family, friends and meaningful work.

Giving also teaches children the value of selflessness, a quality mocked by much of our self-centered culture. Giving shows children how to think about others rather than themselves.

2. Save Wisely

Saving allows individuals to be self-sufficient. But it must be done in measured ways.

When you’re teaching your children to save, explain to them why they should be saving in the first place. Perhaps they want a particular toy they saw advertised. Explain to them how to save for the toy so they can purchase it.

You’re teaching your children how to plan when you teach them how to save. You’re teaching them how to think about the future, how to delay gratification, and how to achieve their goals.

That’s why teaching them to save wisely is so very important. Part of that is not just saving for things they enjoy, but to also save for emergencies. It’s not a bad idea to teach your older children about emergencies and why they should save for those.

3. Work Smartly

Working in a smart manner isn’t something many children are taught. Instead, they are taught to work hard. While working hard is very, very important, it’s only one part of working in a smart manner.

The other part of working in a smart manner is to work efficiently. Teach your children how to get more done in less time by batch-processing chores. For example, teach them that they can pull the weeds after mowing the lawn. Teach them to sweep the kitchen floor after doing the dishes.

Show your children how to set time limits for themselves to get chores done so they stay on task. If they allow themselves an infinite amount of time to get something done, they just might take that long to do so. Make it fun. Make it a game. Get them motivated!

Finally, show them how work results in money. We give our kids a commission, not an allowance. Why? Kids should learn that work results in earning income. They shouldn’t receive money for simply existing.

You might make a list of chores that are a part of their household responsibilities without pay, and then make a special list of chores that allow them to earn some money. Put it up on the refrigerator. Again, make it fun. Praise your children when they complete the chores.

The other great lesson this teaches children is to keep a to-do list. Task management is something that’s also often a neglected topic in schools, so teaching them how to work using a task list is a necessity that will help them calmly navigate all of the various responsibilities they have in life.

Bonus Tip: Be a good example to your children.

If you haven’t noticed (I’m sure you have), your children watch your every move.

This includes, of course, how you manage your money. They watch what you spend money on, how you spend your money and how you deal with difficult financial situations.

The best way to be a good example to your children is not to merely act like you have it all together, but to actually have it all together. Actually organize your finances online and put together a monthly budget. Invest regularly for your retirement. Reduce the interest you are paying on that debt by getting a balance transfer credit card and begin to pay down that debt as fast as you can. Whatever your financial next step is, take it.

As your children grow, you’ll be able to show them how you’re handling your money. They’ll learn these lessons from what they see you doing, but they’ll also learn as you explain to them how money works.

But remember, the best possible way to be a good example to your children is to actually become the kind of person you want your children to become. It needs to be genuine, so work on yourself.

Teach yourself to manage money better than ever before, be open with them about how you are investing your money, and if you have debt, be honest and explain the mistakes you’ve made and how you are fixing them. Show them how you track your credit by checking your credit scores for free on Credit.com and by getting your free annual credit reports. Your children will catch on and will hopefully follow your excellent example.

Teach these lessons to your children before high school, and they’re likely to excel beyond most of the peers and experience the rewards of their financial education for many years to come.

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