I learned about money early in life. We didn’t have a lot of money when I was growing up so we lived simple lives and we worked. All of us. I got a job delivery newspapers at about the age of 10. I saved up for the things that I wanted. One of the things I am most proud from my childhood is the fact that I earned and saved enough money on my own to go on a trip to England when I was just 13 years old. As a parent, I believe that teaching children about money is very important.
Learning about money is more then just being able to read, count, add, subtract and recognize denominations of bills and coins. Those are important skills, but they don’t teach you how to manage money. Financial literacy also involves learning what money is and where it comes from, along with how to spend, how to save and how to plan, among other things. It also involves learning how to wait, how to evaluate and how to go without.
Here are my top five tips for teaching children about money.
Money does not grow on trees. But where does it come from? The first lesson you probably ever told your children about money, or one of them, is that it doesn’t grow on trees. I’ve said it. We’ve all said it. I admit, I said it for a while and wondered why I had to keep repeating myself. That’s when I realized that I needed to explain where money actually came from. Explain the actual nuts and bolts of money. Meaning, explain that you go to work and make x per hour. Take them through the whole process. Explain that you may make an hourly (or weekly) wage but at the end of the week taxes and other things like insurance are taken out of your pay. The money you’re left with when you get the actual check is all you have until the next check. Companies will not usually advance you money, often times your pay is a week or two behind. The end lesson – you need to work to make more money, because it doesn’t grow on trees.
Make the most of your own experience. I’ve told my son many times about how I worked and saved and sent myself to England in high school. He knows that what I tell him about saving money is the truth, not just words. At this point in time we do not have credit cards, only debit cards. At first my oldest son thought the two were the same. I explained that I consider a debit card to be a plastic form of cash, and that you can only spend as much as you have in the bank on that card. Good, bad or ugly, share your own experiences so your children can learn from them.
Don’t buy right away if at all possible. There is no buy now, pay later in our house. As such, we think hard about our purchases before we make them. For purchases that are more then a few dollars, I try to think on the decision if I really need that item for at least a couple of days, sometimes longer. Waiting to make a purchase encourages careful consideration if you really need the item, as well as budgeting and planning so you are able to make the purchase.
Budget and plan. You know that question, if your friends were jumping off of a bridge would you? Same principle. Children need to understand that you can’t have everything right now. Sometimes things take time to work and save for. Teach your children how to budget their money and make it go the furthest, as well as how to plan how to save and spend.
Be yourself. Don’t compete with the Jones, or the Smiths, or anyone else. You don’t have to have what all your friends have. It’s ok to want something, but children need to understand that it’s important to be themselves.
Post presented by Genworth Financial