Teaching Money to Kids, The Rights and Wrongs of Raising Financially Aware Children
December 20, 2013
My businesses have been successful and afforded me a fantastic lifestyle. But all of this leads me to a constantly nagging fear – that the trappings of this great life will yield unbalanced, bratty children who will grow up to become knuckleheads. Leading me to believe that teaching money to kids is a very important part of raising a child with a successful future.
So what are parents who want productive, fulfilled children to do? It’s not that kids need to seek or avoid wealth, but they do need to understand it to become functional members of society. The first step is to recognize that it’s on us to teach them well. It’s our responsibility to help them see that money is a tool – it’s neither good nor bad, but can be used for either end. The burden of financial education, for better or worse, is on the shoulders of parents – schools don’t teach personal finance anymore, and even if they did, would you trust them to do it right?
There are 5 primary steps you can take now to help teach financial basics to your kids. You don’t need to teach them to be bankers or entrepreneurs by age 10, but the building blocks are a good start. Here are the most important first steps:
Talk about Money – It’s a part of everyone’s life, and ignoring it because it is considered by some as “the root of all evil” is like ignoring oxygen because it feeds fire. It’s neither good nor evil, just discuss it in honest terms. Call it out when it’s used for good and for when it’s used for evil; your children need to see it from all sides.
Teach Them the Elements – Let your kids know what you’re doing when you make or get change, when you make a deposit or write a check, and when you leave a tip. Discuss what a credit card is to dispel the thought that it’s some sort of magic source of money. Explain how money works and allow them see it in practice.
Make Them Work – “But,” you say, “I love them and don’t want them to have to slave away and waste their youth.” Wrong. Show them how much you love them by letting them learn work ethic. Make sure the job is hard and has real consequences like not getting paid if they don’t work. Ideally, let it be a manual labor job so that they can see how hard some jobs are, and why they need to appreciate the fruits of their labors – money.
Encourage Them to Save and Give – Spending comes easy for kids; it’s the saving and giving that’s harder to do. Help them understand why they should save and why they should give. There is nothing like using your own finances and actions to show them by example.
Introduce them to Entrepreneurs – Kids are inundated with all sorts of images and descriptions of professions they might want to pursue when they grow up, but rarely is entrepreneurship one of the options. I’m not suggesting you force it on them, but consider it an option at least. Introduce them to your friends who are entrepreneurs and let them explain what one does. If you haven’t see it yet, check out my buddy Cameron Herold’s TEDx talk on raising your children to be entrepreneurs.
It’s up to us as parents to teach our kids about money – and if we want to raise productive, responsible members of society, we had better get on it sooner rather than later.