When I was just a wee lad, I learned my financial education from my parents and grandparents!
Both my parents and grandparents were entrepreneurs, and ran a frugal tight ship in their households.
Flash forward to present day, and I’m not an entrepreneur like they were, and while my finances are exemplary, I don’t run the tight ship that they ran. So since my kids don’t have the same type of financial education that I was getting by living in a small business household, what can I do to give them similar benefits in Home Financial Educations?
This is what I’m going to try:
- They get an allowance, but I’m going to try to replace it with dividend stocks. This way they will begin to learn about stocks as we track them together. My thoughts on this are still half-baked and I’m experimenting and thinking about it all the time.
- I encourage my kids to manage their allowance money. I give them pointers on their purchases and tell them ways they could have bought things more cheaply. I let them make purchasing mistakes, but also teach them a better way of making future purchases.
- While they are unrestricted with their purchases, they are not allowed to go into debt for more than 1 day. If they don’t have the money they aren’t allowed to buy anything. I live by the same rule as I teach with this one.
- I talk about finances and watch shows that I think they can benefit from, like Mad Money, and CNBC. While I don’t action on what I hear on these shows, at least my kids get familiar with the financial language.
The thing about teaching finances to kids, is that both the manner of teaching the financial concepts and the kids vary greatly. So you might have an excellent financial program, but if your child isn’t in league with that style of teaching, it might backfire, and the kids could rebel financially. You really have to know your kid to provided the best style of teaching for them.
To me it’s important to get money in their hands, so they get experience with money early, so all of the magic is out of the equation, and they learn that money is just another tool. I like that they learn that money isn’t magic nor to be worshiped, it’s just a tool, nothing more and nothing less.
We’ve been attempting to teach our 6 & 4 year old financial concepts as well. They get paid in pennies but it can still add up to over a dollar every couple weeks if they do all their chores! We pay tax but they have to learn to save up for their own purchases. Even the 4 year old is able to save up a dollar for the dollar store! My 6 year old is getting addicted to ebay because she’s learning that used is WAY cheaper!
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When my kids were small, they earned an allowance and required to save half. I involved them in many different things such as investing, my businesses and life in general. They are now successful adults. I asked them what, if anything we did to help them. They told us that they observed what we did and copied it. Role models are important!
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