I was very fortunate to have had all four of my grandparents and a slew of aunts, uncles, and cousins in my small town. During family get-togethers we often reminisce on the life lessons learned during those days. Reflecting on the ones that have impacted me the most, money undoubtedly is at the top of the list.
My maternal grandfather was a firm believer in nothing in life is free. He balanced his motto, for his grandchildren, with a list of available commission jobs he needed done around the house. We could wash his car (inside and outside), mow the lawn, help our grandma around the house, and organize the garage. If the jobs were done to his retired Air Force veteran standards then we were sure to get our roller-skating money for the weekend. Each of us learned valuable lessons about working hard and what it means to save for a rainy day.
I knew when we started a family that continuing the legacy of my grandfather was important. My little ones needed to understand the value of a dollar at a young age, to believe in working hard, the wisdom behind making a budget, and the importance of staying out of debt and having a rainy day fund. The question was at what age do I start and how do I make it fun? Sometimes, as we all know, life is about trial and error. So, let me share with you the things I have learned and hopefully you can pass the knowledge along to the next generations:
1. Read everything.
Read even the things you disagree with. The more you learn about money and budgeting, the more you are able to share. The surprising thing is most of us weren’t taught financial literacy, yet it’s literally life-changing. We will deal with finance for the rest of our lives. Therefore, never stop learning how to improve. Learn all you can and then learn more. And share as you go. Some books I have enjoyed reading about money are Rich Dad Poor Dad by Robert Kiyosaki (he also has a version talking about kids), Smart Money Smart Kids by Dave Ramsey and Rachel Cruze, and The Psychology of Money by Morgan Housel.
2. Learning is always better when it’s fun.
Yes, even learning about money can be fun. It’s easy to start when they are young. Pull out a piggy bank and start with a few coins. If they are a little older, find a clear jar and make some goal marks on it. Once the child hits a line, you praise them for their savings and then you add in a little of your money. Make sure if they are young to add coins. When kids are young they don’t understand the value of a dollar bill, they understand what they can see, the jar getting filled with change. Some other great ways to make it fun are by playing money games, making a shelf on the pantry and creating a mini store, and having a savings contest.
3. Go shopping with your kids’ money.
Every parent’s dream, right? Hold on, let me explain. Dedicate some of your kid’s money for something they really want. For example, my son loves tennis shoes. Take them to the store and physically show them, with $150, they can purchase one pair of tennis shoes on the new release section, or on the sale side they can get two or three pairs of shoes from last month’s line. Physically holding the shoes and trying them on helps them understand what it is they are purchasing and how to get the most for the money. When I did this with my son, I even went as far as to show him shoes that were out of his price range and gave him an option to save longer for them.
4. Don’t give the kids an allowance.
I know this is going to be hard for some parents to understand, but hear me out before you debunk the idea. Instead, give kids commission. No one gets money for simply breathing or at least they shouldn’t. Reality is we all work for money. And work isn’t a bad thing. Children need to understand this. Pay them for the jobs they do. I split it in my house in three categories: chores, jobs, and extras. Chores are household things that are their responsibilities (cleaning their rooms and picking up after themselves). Jobs are things I’m willing to pay them to do (dishes, taking out the trash, etc). And “extras” are like “overtime.” These are things around the house I usually do, but when asked for extra money that is a little out of the norm, we negotiate and they will do something like clean my car or bathroom for the extra dollars.
When my daughter was young, we would always volunteer in our community. I wanted her to comprehend the value of giving. I decided to start with time and not money. One way to transition from giving of your time to giving money is by the give-buy system. It’s almost like a yard sale but you, as the parent, are the only buyer. Yes, it’s a sacrifice you make as a parent to teach this lesson. Give a dollar amount to gently worn items. A great example is for each clothing item they get 50¢ and for each toy they receive $1. You can cap this (up to $20). Then have the child(ren) take it to the shelter with you. Afterwards go have fun shopping or praise them for saving it.
6. Teach your kids the difference between “needs” and “wants”.
This isn’t an easy lesson to teach because as adults we still have a hard time with it. But the reality is neither school nor social media is going to teach it to them. We have to do this one. Birthday and Christmas are great times for this lesson. My kids are October and November babies. When I felt they were old enough to really understand this difference, I had the kids make a list. On their birthday list they could only write down the things they “needed”. My daughter put down her hair products (she has a lot of hair), socks, shoes, etc. Then for their Christmas list they had to write down all the things they “wanted”, video games, toys, etc. I had them do both lists on the same day. This gave me the opportunity to talk about the differences. And for that year they received their “needs” for their birthday and their “wants” for Christmas. The benefit to us was I saved money that year on their birthdays.
7. Even little ones can save
I am a firm believer that even young children can begin to understand what a budget is. I started at age five. I took the young ones to the store and had them take a picture of a toy they wanted. We came home and glued it to a jar, along with jars labeled spending, giving, and savings. I got a roll of quarters from the bank and with every one dollar they earned I had them put a quarter in each jar. This gave them a chance to see it grow and something to look forward to as they got closer to having enough money for the toy they picked out.
Financial literacy is not a lesson the next generations can skip. They “need” to understand the value of money and how to have it work for them and not simply work for it. No one can afford the topic of finances to be taboo. I’m continuously learning about money, investments, and budgeting. As I learn, I’m quick to creatively share the knowledge with my kids. I challenge you to start today talking with your children about money and to begin teaching them lessons that will impact their lives for generations to come.