I feel it is very important to teach children about financial matters. One reason that parents do not teach their children about money, is because they are not sure they know how to handle money either. It is one of the things that is not always taught in school. We earn degrees in order to earn a living but are not always taught how to handle the money we earn.
It is important to start teaching children about money when they are young. You can use the world as your financial classroom. Real life triggers lessons you want to teach your child, and since you are probably handling money regularly in front of your child, stop and take two minutes to explain what you are doing.
In the book “Money Doesn’t Grow on Trees” by Neale S. Godfrey there is a story about a father and his son. He had taken his children on a trip across the country to see their grandparents. Everytime they stopped to eat, one of the sons was always straggling behind. Finally, when they were almost home, the father asked him why he always late. He said he was picking up the money his dad kept forgetting on the tables. The father realized to his son his leaving money on the table looked like he had forgotten his money.
Another big issue, is teaching the difference between wants and needs. I know when you are a child it is hard to know the difference, but if we don’t teach them when they are younger, it is harder when they are older. That is part of the problem how people spend money now. They grow up not knowing the difference between real wants and needs. Then get into trouble with debt because they feel like they deserve anything they want.
Many people put their financial lives into jeopardy because they want the instant gratification of buying things they want instead of saving until they can afford them. Previous generations started with small houses and cars and worked and saved and gradually improved their way of life. Many people today, start first jobs and expect to have a big house and expensive cars right away. They figure if you can afford payments you can afford it. But that isn’t always the case. And living that way, you have no money for savings. It is important also to have an Emergency fund. Especially in today’s economy with the way the job market is. People get into trouble when they get used to living paycheck to paycheck on two incomes and then if one (or both) of them lose their jobs then they will be in trouble.
Another source for information on teaching children about finances is daveramsey.com. Dave Ramsey has books directed to kids and a Financial Peace Jr. kit with a book about saving your money and charts and envelopes to manage their money. One of his principles is to Save, Give and Spend. His program has envelopes labeled Save, Give and Spend.
In the book “Money Doesn’t Grow on Trees” some of the chapters cover How to teach your children the basics of money management, When to start your child on an allowance, How to use the World as your Financial Classroom. It also has games for different age groups on teaching children about money.
Another book I recommend is “Rich Dad Poor Dad” by Robert Kiyosaki. The subtitle is “What the Rich Teach Their Kids about Money – That the Poor and Middle Class Do Not!”
I also feel if you teach children the importance of saving money and the power of compound interest. Even if you can only save a small amount it is better than nothing. If you gradually increase the percentage it will eventually add up to a lot.
In closing, I feel the most important issues are to teach children to pay themselves first and save some of what they earn, difference between wants and needs and the power of compound interest.
It’s not How much you earn that matters, its how much you Spend!!
Nancy Kvamme has started a money coaching business. She has had a passion for learning about saving and making the most of money for several years. She has worked in the Real Estate appraisal business for 20 years.