If you have not started teaching your kids about money, you might want to get started soon. When I say teaching them about money I am talking about earning, saving, giving and investing.
We spend tons of time making sure they make good grades, mind their manners, and are involved in any and all kinds of sports. Don’t misunderstand, all of these things are important. They all create a well-rounded person. However, if you don’t teach them about money, you are setting them up to seriously fail as an adult.
Someday, they will have a job and they will either know how to manage that income or they will overspend and be in debt the rest of their life.
Studies show that kids want to know more about money. So let’s start with the basics.
5 Tips to Raising Kids Who are Great with Money!
When you just hand a child money they really don’t learn anything. Instead, create jobs or chores that they can do around the house in order to earn money. They need to make the connection between working and then earning a paycheck.
If you hand them $20 for going out to eat and $50 for spending at summer camp then they will begin to expect it all the time. Pretty soon it will be a prom dress, a new car at age 16, free college and they might still have that same expectation once they are an adult. You see where I am going with this.
There is a time and place for parents to give money. Birthdays and Christmas are good examples of this. Beyond gift giving, set up a system that works for your family. Chores and work around the house will do wonders for them. They probably won’t like it, but those lessons will serve them well when they are adults.
Start your child early on with this concept. If you teach them to earn but never talk about and require savings, they will grow up never knowing how important it is. In turn, they will spend everything they make and when a financial crisis happens, they will have no emergency money to turn to.
I suggest requiring that they save 10% of their earnings. It teaches them to prepare for a rainy day and also doesn’t allow them to spend everything they make. This lesson is one many adults still struggle with!
We have always taught our daughters that giving is not an option. My husband and I give 10% to our church and our girls are also required to do the same with any money they earn.
A child who never learns to give out of whatever they have, will become an adult who believes they don’t have enough to give.
Children feel good inside when they are taught to do good things. Give them that sense of value and self-worth that comes from giving to people, organizations and churches. This will follow them into adulthood where giving will continue.
If someday your child becomes very wealthy, then their heart will already be soft towards the pattern of giving. If they don’t end up with tons of money as an adult, that giving spirit will still be a part of the fabric of their lives because it was imprinted on them when they were young. Either way is a “win, win” situation.
This can be hard for younger kids to grasp but start talking about it in grade school. I recommend using a small plant or flower for a physical example. Plant a flower in a pot and talk to them about how when we add water to the flower and then place it in the sunlight it grows. Remind them that it doesn’t grow overnight. It takes several weeks and even months for some flowers to really take off.
Bring money into this conversation while planting your flower. Tell them when we invest our money into a company they use it (like the flower uses the water and the sun) to make the company bigger and stronger. As the company grows, so does your money. Remind them that just like the flower takes time to grow so does our investment. At this point you are just introducing the idea of investing so they recognize it and will be more open to it once they are older.
If you have older kids who are teenagers, introduce them to a compound interest calculator. Teach them how to play around with the numbers and see where they could end up financially if they start early vs starting later in life. It can be eye opening when kids actually see what could happen if they commit to investing.
Final thoughts: If you plan to raise your child to make good grades and go to college so they can get a good job, yet you never teach them HOW to save, spend, give and invest, then you are surely setting them up for failure. They will end up making money but will never know how to handle what they do or don’t make.
Share in the comments below how you have worked with your kids regarding money. I LOVE to hear what other parents are doing in this area. Be sure to FOLLOW ME ON PINTEREST HERE!