Kids and Finance
 - How to teach sound money habits early.

Why is finance not a mandatory class in our school system?

The data is clear. Research out of the University of Cambridge (UK) has confirmed that “by age 7, several basic concepts, relating broadly to later finance behaviours, will typically have developed”.
From birth, children begin to learn from us, their role models. As they continue grow, that includes how we handle money and our finances.
The divorce rate is 50%, and “money problems” are in the top three reasons. 

If you have money problems yourself, don’t despair and have those talks with 
your kids regardless. It's never too early or too late to start. Just start.
Below are a few little hints and tips to help you do that, and start NOW, no matter what age your kids are.

A Few (age appropriate) Ways to Teach Kids About Money 

Pre-school and Kindergartners
  • Use a clear jar to save. A piggy bank is a great idea but it doesn’t give kids a visual. They benefit more from seeing, that yesterday they had one dollar, but today they’ve 
added 5 dimes, now it’s a dollar fifty.

  • Talk about it daily, and when you go to the grocery store SHOW them what could be purchased (or not) with that money. If they have their dreams on a specific toy, tell them you’ll help them buy it. Make them take the cash right out their jar and physically hand that money to the cashier. Even if you’re paying for some of it, make them pay
 for some of it right out of their jar. They will see it, feel it, and understand it better.

  • Stress the importance of giving.
Elementary and Middle School
  • Open a bank account.
  • Pay commissions, NOT allowances.
  • Don’t just give your kids money for breathing. Make them work for it, by taking out the trash, cleaning their room, clearing the table, This helps kids learn that money is EARNED not given.
  • Teach them to avoid impulse buys. Ie: “Mom I just found the cutest dress, I love it, can WE please buy it?” Sound familiar? This age group really knows how to capitalize on guilt. Impulse buying happens especially when it’s someone else’s money. Instead of giving in, let your child know they can use all or part of THEIR hard earned cash to pay for it.
  • At the same time, encourage them to wait at least 24 hrs before making the purchase. It will likely still be there tomorrow and they’ll be able to make that money decision with a level head the next day. (Remind them about the other things they may be wanting.)
  • Stress the importance of giving.
  • Teach them contentment. Your teen probably spends a good chunk of their time staring at a screen as they scroll through social media. Every second they’re online they’re seeing the highlight reel of friends, family, strangers and ads. It’s the quickest way to bring on the comparison trap. “Mark's parents just bought a new car, how come we/I have to drive a clunker?” “Sally from school just had a birthday party that her parents paid $10,000 for, I wish I could have a birthday party like that”. Contentment starts in the heart. Remind them how well your car gets them from point A to point B. Remind them that no matter how grandiose a birthday party is, what’s more important are the people who attend. “Who’s around the dinner table is more important than what’s on it.”
  • Encourage them to check their bank account daily.
  • Instill saving for college vs student loans and open another account just for that. If they say they’re not going to college then call it their house savings account. If they are working a part time or summer job, absolutely ensure a % (10% is a great start) of their net income is put into THIS special account. The SAVINGS account not to be touched.
  • Teach them the DANGERS of credit cards. In our society it’s almost mandatory to have a credit card, to book a hotel etc. What they must adhere to is NEVER using that card for an amount they cannot immediately pay and make them pay that debt immediately, before they get the bill.
  • Help them figure out the many ways they can earn money. It really is the best way to teach our kids about handling money properly. When they want to buy something with their hard earned money, remind them how many hours they had to work for it.
  • Stress the importance of giving.

The Importance of Giving = Good Character Building

Once your child starts earning money, even just a little, be sure to always teach them about giving. They can pick, whatever they want. Their church, a charity, or even someone they know who needs a little help. Even just a small regular amount, goes a long way to helping them learn, that the effect of giving doesn’t just help the people they give it to, but the giver as well. Like a wise person once said, “the best way to truly be happy, is to make someone else happy.”

Live Well, Love Well, Lead Well.

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