My upcoming book, Beyond the Piggy Bank, is intended to help parents create a plan to teach their kids about money. I was inspired because I have three children of my own, and raising financially responsible adults in times of economic turmoil and credit-happy behavior was important to me. I thought finding a financial education program would be easy, a simple thirty-minute Internet search. This was not the case.
After years of research, interviews, and consideration, I have finally developed a well thought out financial roadmap to teach my kids about money. (Download the Financial Roadmap for Kids) Granted, it will evolve, but the original plan is pretty solid. The point of this blog post or my book though is not to share my plan with you. It’s a great plan, thoughtful and well suited to my family’s needs. But something I came to realize when I was searching for the perfect family financial education curriculum was that lots of qualified people have lots of smart ideas about how to teach kids about money, and the right way to go about it will be dependent on you, your child, and your circumstances.
My biggest realization, the one that drove me to write my book and this post was that the solution empowering parents to teach their kids about money was not to find exact answers and then prescribe them; the answer was to come up with a framework that everyone can tailor to their respective situations and children.
My book is meant to provide that framework and serve as a checklist of all the topics you need to teach your children to give them a working knowledge of their own finances. After reading it, I want you to be able to develop the framework here into your own well-researched financial education roadmap. The roadmap you come up with will be unique to your child and your circumstances.
The book will walk you through the financial education “checklist” in detail, but I wanted to share some of what I learned here on my blog. Most importantly, I wanted to share the financial education roadmap. Free for you to download in either color or black and white, the financial roadmap is a blank took that you can fill out that will lay out for you in simple, easy-to-follow terms your plan for teaching your child financial responsibility.
The Financial Roadmap Explained
The roadmap consists of six different phases, each of which requires you to answer a different set of questions.
First, what are your financial values, and what is your own level of financial literacy? Your answers will serve as the foundation for the rest of your roadmap.
Second, when and how are you going to introduce your child to money? At what age and what methodology will you use? How will you explain to them fundamental concepts like exchanging money for goods and services?
Third, will you give them an allowance? At what age, and what will the logistics be? Will you tie the allowance to chores? Will you require them to budget? What is your purpose in giving them an allowance?
Fourth, at what age do you expect your child to earn an income beyond their allowance? What are your expectations of the money they earn? How do you foster a disciplined work ethic?
Fifth, how will you begin to introduce slightly more complex financial topics, like the different forms money comes in (checks, debit cards, credit cards)? When will you have them open a bank account? How will you explain the concept of making your money work for you via interest? How will you explain investing?
Sixth, what is your philosophy when it comes to philanthropy? How will you inspire your child to give back, both of their time and their money?
When Does the Plan Start?
Most of the books I read in my search for the perfect financial literacy program advocated for a plan that actively begins when children are toddlers, and I agree with this. If your child is already past this point, do not despair; it’s never too late to start. However, you might have to do some rehabilitation to help them unlearn unhealthy habits they may have picked up.
Choosing when to start each part of the roadmap will depend on your child. There are recommended ages for the major steps, like setting up an allowance, but you should make your own choices based on what you feel is right for you and your child. A great resource that lays out the steps to take with children of different ages has been made available by the Money as You Grow initiative by the Presidents Advisory Council. Additionally, every child is different. If you have more than one child, you might have multiple plans in your household.
Good luck in creating your own roadmap! Continue to check back into the site for updates relating to each section of the roadmap. For a full guide, please see Beyond the Piggy Bank, and feel free to contact me with questions.