Teaching kids the basics

January 4, 2008 at 4:20 pm Leave a comment

I came across an article on USA Today that dealt specifically with teaching your kids how to be good savers. I think it’s absolutely crucial for parents to teach their children how to handle money. Here’s a brief listing of the basic financial principles to ensure your child’s financial future is secure.

Money doesn’t grow on trees
I know a number of parents that give their kids allowances for simply being a part of the family. I use to get an allowance when I was younger, but by taking this route, you eliminate an important teaching every kid should know, that money doesn’t grow on trees.

When our daughter turned 3 years of age, we bought a little dry erase board with a magnet so we could put it on the refrigerator door. This came to be known as her ‘job’ board. We kept it simple by listing only 2 jobs: feeding the dogs and picking up her toys. We did this by drawing a weekly calendar with the days of the week (only Monday through Friday) and 2 rows. Each job was designated with a sticker of 2 dogs and toys. Each day, as she completed her jobs, she would then mark an X in the column for that day. At the end of the week, she would receive $0.50 for each X on her board.

All that to say that it’s important to teach your kids that money comes from work, not simply for existing. I like how Dave Ramsey explains it, “I want these kids to learn to work and not made allowance for.” Our daughter is turning 5 in a few days and this system has worked wonderfully. She understands that we won’t buy everything she wants and that she has to save her own money for that toy she saw on tv the other day. It sure makes trips to the mall and grocery store much less stressful.

Giving must be learned
Most financial experts highlight saving when it comes to proper financial management. While saving is important, an element that is just as crucial, if not more, is teaching your kids how to give. In our household, at the top of our budget is our tithe to our local church. It’s money we never see that comes right off the top. We hold those same expectations for our kids, so our daughter gives $1 of her money to the church. As evangelical Christians, this is something we have been called to do with our money.

But, for those of you who may not share similar beliefs, it’s still important to give or donate. It’s important for kids to understand this concept. This is essentially not a ‘financial’ concept, but one that has to do more with character and personal development.

Don’t spend everything you make
Everyone knows they shouldn’t spend all or more than they earn. Do they? I challenge this concept. Although, it’s embraced in the financial community, the everyday Dick and Jane hasn’t quite grasped this concept. The subprime mortgage meltdown is a prime example. Most people weren’t taught how to actually live within their means and save money. So, for those of you that know, it’s important for you to teach your kids.

As illustrated earlier, our daughter, because of her young age, keeps the money she’s earned in a clear plastic container, dubbed the ‘dollar jar.’ She get excited as the money accumulates and fills the jar. Every once in a while, she’ll see something that she wants to by so we ask her to count her money. If she has enough to buy it, we take care to do so.

Saving, however, is two-fold. There are 2 main reasons to save: purchasing and wealth building. It’s important for kids to learn that it’s wise to save money for things you want to buy and to simply accumulate financial security. Our daughter being so young, the latter is not emphasized as of yet. But, we’ve completely eliminated simple phrases in our household that are quite common in our society, like, “how much down?”, “financing”, “borrowing”, “credit line”, because we feel it’s not conducive to good money management. Some may disagree, but kids should understand how to manage what they have before they can manage other people’s money.

Although the basics listed here are brief, they are essential. If there’s something I missed that you feel is important when it comes to teaching kids how to handle money, I’d love to know.

Advertisements

Entry filed under: Kids.

The MoneyTalk family will be going through some changes The ‘coming’ credit card crunch would be a good thing

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Calendar

January 2008
M T W T F S S
« Dec   Feb »
 123456
78910111213
14151617181920
21222324252627
28293031  

Most Recent Posts


%d bloggers like this: