Hello, readers of Anita’s blog. We are Paul & Camille Walker from www.kidsfamilyfinance.com and honored to guest post today. Over at KidsFamilyFinance we are a niche blog that is all about teaching kids about money.
One question we have asked ourselves (and heard many others ask as well) is why do kids learn so much about math, English, history, etc. in school but not about money? It is a skill that is so important, but is usually limited to only one high school financial literacy class.
Currently about 46% of all US households have credit card debt and the average credit card debt balance is $15,480. Now I know this may be a major faux pas to talk about credit card debt a few days after Black Friday, but consumerism is an epidemic in our country. It is our belief that the lack of knowledge of basic financial principles is the catalyst for many who end up in financial trouble.
Teaching Kids About Finances
So, how can we teach our children about finances? Well, I recently had a conversation with my first grader where I tried to explain why credit cards end up costing you more because of interest. His reply was, “Dad, what’s interest?”
Have you ever tried to explain financial concepts to someone with very basic knowledge on the subject? Well, it’s very difficult. I fumbled my way through an explanation, and eventually confused him.
We have found that teaching kids about money goes far beyond teaching them what interest is or how banks work. It is more about teaching them life principles that will prepare them to be financially responsible as adults. Here are a few examples:
Work is #1
Kids need to learn that work = money. This can be somewhat difficult these days. We all receive our paychecks electronically, we pay our bills electronically, and we buy everything with plastic. How many of you have told your kids you don’t have any money, only to have them respond…”Just use your card mom”?
The equation of work = money has become complicated. Many kids think credit cards = money. With the ease of using plastic and services like Apple Pay on the way, that “sting” of associating purchases with work is lessening and lessening.
At KidsFamilyFinance we are so passionate about work that we have created a system to help kids learn that work = money. We call it the Workstars Family Economy System (www.workstarschart.com). Feel free to check it out, or implement a chore chart of your own. We are big fans of teaching kids early how money is actually earned.
Saving & Giving
All of us are born with one of two natural tendencies – we are either spenders or savers. Both have pros and both have cons. We tend to think of spenders in a more negative context, but savers can sometimes become “hoarders” and end up with more money than they actually need.
Now I don’t want this to go down a religious road, but I believe that most of us can agree that we are merely stewards of our money and resources while we are here on the earth. I feel that how we act as stewards over our money (no matter how much or little) determines whether or not we are financially successful.
So, whether your child is a saver or not, it is important to teach them how to save and give. One thing we have implemented is “give, spend, save” jars at our house. As your kids earn money they can allocate amounts to each jar and begin to learn the principles of being a good steward of money.
Notice how I used the word “earn” above? This may seem controversial, but we do not believe allowances are a sound principle to teach your child. It’s pretty easy when you sit back and think about it – you’re basically teaching your kid that they can get money for doing nothing.
There may be sound money management principles taught once they receive the money, but we teach there should be a direct link between work and money.
Paying for chores or encouraging them to get a job (if they are old enough) are much better alternatives to help prepare your young ones for the real world.
These are a few tips to help you think about ways to start teaching your kids about money. We have seen the greatest success in teaching principles such as the ones outlined above and hope you have the same experience.
We also want to congratulate Anita on the new baby. She is absolutely adorable!
Paul & Camille Walker