Teaching kids about money isn’t so hard, just leave them alone and they’ll learn it all on their own from movies, the TV, their buddies at school and observing how their friends’ parents and YOU manage your money.
Sound good? Nah, I didn’t think so.
Well, while it is true that most kids will probably absorb ideas about money matters from all of these sources at one time or another, I don’t think it’s a good idea to leave an important subject like financial literacy for kids totally up to the society around us, do you? I mean do you really want the family down the street with the Benz, the Lexus and every cool gadget imaginable to be one of your kid’s models for learning the value of a dollar or how to spend money wisely?
There’s no getting away from all the crazy messages our consumer culture constantly pounds our senses with 24/7 and tuning them out isn’t really an option either. So one of the best things we can do for kids these days is to arm them with the right kinds of information so that they become good at filtering through these waves of crapola, and so they’ll also be able to put a beat-down on the coming financial challenges of their adulthood.
YOU, not society at large, should be the one that has the main input and impact on the belief systems that your kids develop throughout the time they are under your roof. And your kids’ attitudes towards money can have profound effects on all the other areas of beliefs that they acquire as they mature into adults.
Before I had kids, I sometimes wondered what would be the best age to start teaching kids about money. What I realized was that although there were opinions by ‘experts’ all over the place about this, the obvious and easy answer is that it is actually never too early to start teaching them, and you can find lots of creative ways to do it. For example, when kids are really little, like two or three years old, you can start teaching them things like identifying money and separating change into pennies, quarters, nickels and dimes. Give them little cups to keep their separated money in.
As their minds develop a little more you might want to expand on this idea by exchanging the cups for jars or little banks. Get them three different ones, like one for saving, one for spending and one for giving. This is an easy way to teach them not only how to save money in general, but it’s also a way to help them understand that money is a tool that can be used to do lots of things.
When kids get a little bit older you can give them an allowance. I know there are lots of different arguments and ideas about what allowances should be given for and what allowances shouldn’t be given for and how much to give. And this is one of the things that you need to figure out for yourself, this is one of those ‘adult’ things that you need to do.
My personal opinion is that kids are part of the family and there are things that need to be done by the family for the family; things like housework, yard work and maintenance work. For this type of stuff, members of the family don’t get paid; it’s just something they have to share in because they are part of the family crew.
So what’s the allowance for? Well, the allowance that they get is not for performing any specific work but rather it is money freely given to them on a regular basis out of the parents’ “spend jar”. The kids then have to allocate this allowance money between their own money jars and in doing so get the foundation of learning about pay periods, budgeting, saving and giving. Extra money can be ‘paid’ out to kids for going the extra mile, or doing a big job like painting a fence, or for sticking to some kind of positive personal or behavioral change.
Along with all the other stuff that’s thrown their way, teenagers face new and different challenges when it comes to money. Even if you have done a pretty good job of laying down some fundamentals of saving, spending and giving, a host of new temptations, interests and ideas pertaining to money will now be challenging them. Don’t shy away from talking about money and teaching money skills during these years, especially if you are a little soft in the money-management area yourself or have gotten burned before by the cycle of consumption and debt. You’ve still got to talk about financial skills so that your kids don’t get the wrong idea of how you live.
Like I said earlier, if you start early and are consistent you have a tremendous opportunity to program your kids’ internal hard drive. And like it or not, the attitudes that youth have towards money will touch and have a profound effect on almost every facet of their adult lives. Therefore we need to instill our kids with the correct ‘worldview’ when it comes to money. Try to create in them an urge to understand but not conform to our consumerist society. We’ve got to help them to understand that wants don’t have to be turned into needs and that by resisting the urge to snag things on impulse they are avoiding being manipulated by ‘the man’.
Having this critical eye instilled in our kids will help them learn to keep their options open and see that anything is possible when they control money instead of having money control them. They can dream the big dreams and try to figure out more about their natural interests and talents rather than seeing economic issues as a possible barrier to creating their own futures and pursuing a passion.
And one of the biggest and best ways we can be consistently teaching kids about money is to always be conscious of the everyday examples that we set for those who will be watching our every move.
How about you? Do you have or interact with kids? Are there any ‘money truths’ that you try to drill into their heads?