You’ll know from my blogs, I believe that using stories is a great way for kids to learn about money. This week I have used one of the most popular children’s stories, 'Frozen', to teach my daughters about spending. Whilst they haven’t watched the movie for over a year or two, they still know the story given they used to watch it almost daily when it first came out!
For this story, I have simply changed Elsa’s inability to control her ice power to an inability to control her spending. Let’s find out how this story plays out and the money lessons kids can learn from this.
The money version of Frozen
Elsa and Anna were two young princesses who lived in a huge castle. They loved playing together. As they were princesses, they were given a large amount of pocket money each week.
Elsa loved to spend her money. Whenever she could, she’d go out and spend, spend, spend. It was so much fun for Anna to watch as Elsa would buy the most amazing things each time she got a bit more money and she'd always spend it all.
One day, they were playing with a new snow machine that Elsa had just bought. It transpired Elsa had, however, accidentally used Anna’s money to buy the machine without her permission. Anna was shocked and fell to the ground.
Their parents found out and were very disappointed with Elsa. They had to put a stop to Elsa’s uncontrollable spending. They locked her in her room, away from Anna, so she’d never be able to spend her sister’s money again.
Anna didn’t really understand what was happening, she just wanted to play and go shopping again.
Queue the song “Do you want to buy a snowman?” (to the tune of "Do you want to build a snowman?")
Many years later, something tragic happened. Their parents went on a voyage across the ocean but got caught in a huge storm and never returned.
The two princesses would inherit all of their parents' money and Elsa would become Queen on her 21st birthday.
Elsa was so nervous about the coronation as it would be the first time in many years where she’d get an opportunity to go to the village and spend money. She was worried she wouldn’t be able to control her spending and everyone would judge her.
On the day of the coronation, Elsa tried her best not to think about spending but instead focused on enjoying the party. Everything was fine until Anna came over to Elsa with a handsome man named Hans. She said she was going to marry Hans as he was rich and said he’d look after her with all his money. Elsa couldn’t believe it. “You’ve just met him!”
Elsa was so angry. She couldn’t contain it any more and went on the biggest spending spree the town had ever witnessed. Her uncontrollable spending was there for everyone to see.
She did the only thing she could think of and ran away. She wanted to go somewhere where she wouldn’t be judged for her spending. She even bought a huge castle in the mountains. She started to sing “I spend dough, I spend dough” (to the tune of "Let it go! Let it go!")
Little did Elsa know, she had bought so much that there was very little left in the shops for others in the village. As some of the items were hard to replace, the price of the remaining items increased significantly and made everyone worse off. [You can do a little side chat about inflation here - for more help on teaching kids about inflation then please read my blog 'How to teach kids about inflation').
Anna was worried about Elsa and decided to go find her so she could help the village from the increasing prices. Anna left Hans in charge of their subjects whilst she went away.
On her way she met Kristoff and his reindeer, Sven. Kristoff didn’t care about money at all but agreed to help Anna find her sister.
Once they reached Elsa’s castle, Anna told Elsa about the money troubles the village was now in due to her spending. Elsa became upset and angry. She went on another spending spree. Whilst she was spending, she used Anna’s bank card and ended up putting Anna in debt. Kristoff saw Anna was in financial trouble and tried to do all he could to get her back to Hans who he believed could help her as he was rich.
Soon after, the henchmen of the Duke of Weselton (who saw Elsa’s spending spree in the village) arrived at Elsa’s castle. They captured her and took her back to the village.
Kristoff managed to get Anna to Hans, however, Hans wasn’t going to simply give her more money. He liked to take money from people as he worked for a credit card company. This meant Anna’s money troubles were only going to get worse.
Elsa somehow managed to escape from where she was being held. As she was looking for her sister, however, she met Hans. He offered her the chance to spend even more money with one of his credit cards. Just as she was about to sign up for her own credit card, her sister Anna jumped in and signed the credit card form instead. This saved Elsa from unknowingly having a lifetime of financial troubles (given her uncontrollable spending sprees). By Anna signing the form, however, her own financial troubles got worse and her bank closed her bank accounts (they froze her assets!).
Elsa realised that the whole situation was her fault including her sister’s financial troubles. She therefore decided to use the money she had remaining from the inheritance from her parents to pay back all the money to Anna and save her from her financial troubles.
she also returned everything she had bought to the village shops so there was enough for everyone and prices could be reasonable again.
Hans was put in prison for trying to give people with spending problems a credit card.
Elsa learned to use her money better. Each month, she saved some money and put some money aside to spend. She no longer allowed herself to overspend. She even used her first month’s spending allowance to pay for a big party for the village.
They all lived happily ever after!
Key messages from the story
This story is to help your kids realise that some people struggle to control their spending. In fact, 63% of adults in the UK overspend (based on the number of people in debt, excluding mortgages). This means there are a lot of Elsas out there.
In extreme cases, people’s inability to control their spending can impact on the lives of their friends and family as they borrow money from them and can’t afford to pay it back.
We want our kids to learn to spend but get into good spending habits. Note, I don’t want kids to be put off spending. Spending is fun and something they need to do, I just want them to do it sensibly.
Pro Spending Tip
Regardless of whether you or your kids are naturally more of a spender or saver, the best thing to do is to split money into spending and saving pots as soon as you receive money.
Let me explain why this is so important. If you keep all your money in one place, it means that every time you are faced with a spending decision, your brain has to make a decision about whether to spend or save. Our brains don’t actually like making decisions and will often go for the decision which is easiest, i.e. the natural spenders will spend and the natural savers will save.
How this framework helps natural spenders: By having money put in a savings pot, then it means that they can still spend but are not wrestling with the decision to spend or save in the moment when they see something they like. They would therefore have taken the decision to save some money before going to the shops, thereby avoiding overspending.
How this framework helps natural savers: By having some money in a spending pot, the savers can spend this money guilt-free as they won't see it as depleting their savings (which they might do if all the money is together in one pot). This means they can enjoy spending.
I’m now a saver. I still have spending pots. For example, I would put a bit of money to the side (in a spreadsheet), for our family holidays. This allows me to essentially spread my holiday spending over time (in advance) so that when we go on holiday, we can spend guilt free (rather than worry about seeing a very large outgoing in one particular month).
We want to encourage our kids to enjoy spending their money. The key to being good with money is to have a good balance of spending and saving. Remember the first rule of wealth is to help your kids to save at least 10% of all the money they receive.
Having separate pots for your money for saving and spending is the most effective way to ensure you follow this rule. It reduces the 'in the moment' decisions between spending or saving if all the money is in one pot. Therefore, if you are giving your kids pocket money (allowance), then get them to split this money into spending and saving as soon as you give it to them so it becomes a habit.
Are you doing this with your own money? Whilst my focus is on helping you teach kids about money, I hope you also find these tips useful for your own money management.
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Thanks for reading!
P.S.. This blog covers the first rule of wealth. Help your kids learn all three rules of wealth (and many more money lessons) with a copy of Grandpa's Fortune Fables. If you are buying 5 or more copies for a school, there is a 20% discount plus free shipping (more details here)