with author Jackie Morgan MacDougall
4 tips to teach children about money
As if affording to raise kids in a bad economy isn't hard enough, parents have the added responsibility to set a positive financial example, teaching them good habits that will set them up for success. We asked our Friends of Ricki on Facebook what they think is the most important tip when teaching their own children about money.
Gina Spend it wisely. When my children were in high school I'd give them a clothing allowance. If they spent it on a couple pair of expensive jeans, that was their decision -- there was no more available. They learned how to shop for bargains and stretch their dollars. When they started working they used that same philosophy. They are now all financially independent and thrifty.
Tessa Credit is not free money!
Heather The most important thing I teach my kids about money is not to buy on a whim. If you want it, and can still remember you want it in a few days, then it'll still be there (for bigger items). I also like to ask her if she'd want it if SHE was paying for it ;)
KIDzOUT Always save some for a rainy day. Things may look rosy, but things can change quickly and it's better to have a safety net. And specifically for my daughter: Don't ever let a man make all your financial decisions.
Team Ricki Bryan “Money doesn't grow on trees." I don't have kids, but that is the most important lesson I learned about money as a child. Work hard, play hard, and save!
Sandy I recently talked to my teens about buying things that seem so important to them right now -- silly, trendy, expensive things that don't last long. I tried to explain that buying these things may feel good for the moment, but things don't last long and the money is gone. Think about saving up for an experience (concert, sports playoff game)… the memories & experience will last forever.
Crissundra I always give 10% to a charitable cause no matter how tight the money may seem.... God will always bless you!!
Nicole We don't give an allowance, but we do have jobs the kids can do if they want to earn money. There are certain things one does at home becuase you live there: keep your room tidy, make your bed, help with dinner and clean up etc. They can get paid for above and beyond work. Now they both have occasional jobs and I don't pay them enough to get them to want to work for me now! :) They both have savings account from a very young age.
Julie The lesson I teach about finance/money is choice and consequence. It is a choice on how to earn, spend, save, etc. When a choice is made, there is a consequence - positive or negative or even indifferent. I have encouraged my kids to set aside 10% to donate, 20% to save and 70% to do with as they choose. I have never "forced" this issue though - just modeled it, and again gave them a choice. At first, they spent their money on frivolous items and then feel disappointed. Over time, though, I have watched them make wiser decisions and experience more positive consequences. The best part? The choice and consequence approach to finance reinforces choice and consequence in the other areas of their life.
Jodie BUDGET: Spelling it is hard...doing it is harder… but worth it.
Danisha's Tips to Teaching Kids about Money
Lead by example While some parents may subscribe to the "Do as I say, not as I do" approach to raising children, that attitude will leave everyone broke, says financial expert Danisha Danielle. "Kids do what you do. If you have a money problem, your kid is going to have a money problem -- unless you fix it." And before you think 'I'll just hide our money issues,' Danisha says, "Kids need to know that money is not a secret, it's not anything to be afraid or ashamed of. Get out of the mindset of 'money is hard, you'd better save or else you’ll end up like Uncle Bill.'
Change your attitude "A lot of people are making a lot of money," says Danisha. "There's not one wealthy person in this world that doesn’t think money comes easily. If you have a negative attitude and implant that negative attitude at an early age, it will be very hard to overcome."
Start communication early Kids are never too young to talk about money. Start age-appropriate conversations so they learn to ask questions and educate themselves throughout childhood. "If they don’t understand there are utilities, food, gas, etc., they won't understand and know what to expect like how many things need to be paid for, how much something costs and why we go to work every day." There are lessons in every day life -- think grocery shopping, where you can compare prices and determine which is the best value. Danisha also includes her daughter Devin, now 12, when making large purchases and teaches lessons of saving and investing. "When I would buy property, my daughter would come with me. If I was remodeling, she would go with me to Home Depot. She's also come with me on business meetings. I feel like my daughter needs to see the choices and how to make decisions ."
Use technology and pop culture "My daughter and I have conversations about things we see on TV -- fancy houses and cars, expensive clothes... we talk about what is projected in the media vs the reality of what money and wealth really means."
And it's already paid off. An entrepreneur in the making, Devin has started a pet sitting business – ordering inexpensive business cards, using a website builder and is constantly coming up with ideas to market herself. "We'll be at a store and see a Petco next door. She'll go in to talk with the manager and leave her business cards. Devin's learning that you don’t just build a website and business booms, you have to market that website. She's learned how many customers you need to talk to before you get a call. And that she has to check email every day – otherwise missing a call, means missing a client.
But Danisha says the biggest lesson parents can teach children is the mindset of abundance and how we can be rich in so many other ways. "Wealth is not in things. It's in passive income, wise investments, freedom of time and convenience. For us, the expanded experiences, like the ability to travel without worrying we can't afford it – that's wealth. It's not found in a Mazerati."