Teach Your Children About Money

I firmly believe that if we'd been taught more about investing and basic money management in high school (and younger!) my classmates wouldn't have some of the financial troubles that they do. I was lucky enough to have parents who taught me those lessons at home, but many of my friends weren't so lucky. I don't think much has changed for our own children. The schools just don't have the time or resources to focus on basic money skills so it's up to us as parents to educate our children.

We must teach them by example and by giving them a chance to try on their own.  If our kids see us playing fast and loose with money they will learn that it's ok to blow your paycheck on a new TV even though we can't pay the heating bills. If they see us paying the minimum on our credit cards every month yet continuing to charge new purchases without a second thought, they will learn that money grows on trees and we can pass on those shopping trips to the next generation. We MUST get our own spending habits under control so they can see that money management matters to us.

We should also allow our children to practice managing money on their own. Setup a system in your home to allow your kids to earn a little money each week. Teach them to save a certain percentage, give a percentage to charity, spend some on fun things and some on necessities. Maybe they'd like to save money for a new bike or an IPOD. Teach them that these "toys" are not easily obtainable, they must work and save for them. Not only will it teach them to save their pennies, it will also cause them to enjoy that purchase even more because they remember how much effort it took to buy it. If they screw up and overspend or spend it on frivilous things, don't bail them out. Make them wait until more money is earned no matter how desperate they are. If you get them that toy anyway they will learn that someone will bail them out each time they overspend. No one bails us out when we max out our credit cards. That attitude learned as children is what gets many people in trouble as they become adults.

My favorite example of an earning system within the home was setup by the Dilley family. They had septuplets several years ago and learned a way to teach their children good behavior and money management at the same time. The kids earn Dilley Dollars for doing their chores and good behavior. The dollars are redeemable for video game time or can be converted to real money (50 cents real money for every Dilley Dollar) which can spent on real things. The kids are taught to save some of it and they learn to appreciate what it takes to make money in this world.

There are many resources online to help guide you in how to educate your children on money. There are several articles on this site about teaching your children, in addition to other beneficial websites.