Start Educating Your Kids about Money Now!
Posted on December 10, 2008
Filed Under Family Finances, Kids and Money, Money Merge Account program |
Darren Hardy, the publisher of Success magazine, has a great blog post with 6 constructive ideas about how to teach your kids about money and how to handle it.
Why teach them about this topic? Well, do you really want your kids to handle thier money the way you/we’ve handled your/our money? Personally, I want my son, Ryan, to be a much better financial manager than I have been. The first step in his education (and mine) has been for us to get on to the Money Merge Account program. When he says he wants something expensive (after all, he is a 13 year boy!), it’s great to be able to explain to him what the impact of spending that money will be on our family goal of living debt-free - rather than just saying “no, we can’t afford that right now.” There is tremendous power in having a goal and being able to show how our spending decisions impact achieving that goal!
The six lessons that Darren Hardy recommends you teach are:
1) Start saving from Day 1: teach your kids about the power of compound interest with the (factorial math) example of a single panny doubling every day for 31 days.
2) Don’t buy junk you don’t need: encourage your kids to ask themselves “Do I need (fill in the blank) or do I just want it?” and “If I want it - how badly do I want it? What would I give up to have it?”
3) Don’t drink from one river: Mr. Hardy recommends tapping in to multiple streams of income. In addition to their allowance, how else can your kids make money? Let them brainstorm now so they won’t be limited to one stream when they grow up.
4) Don’t let your house be bigger than your wallet: this is a more advanced lesson for your kids about debt-to-income ratio but your kids should still be taught about living within their means, and use this topic as an opportunity to educate about monthly living expenses and budgeting.
5) Don’t leave your eggs exposed: here he talks about diversifying - again an advanced topic - but as your child’s savings grow you can teach this lesson by talking about 529 college funds, CDs, savings bonds, savings accounts and other elementary investment strategies and how best to “invest” their savings.
6) Grow your money tree: teach your child that he/she is their own money tree and that the biggest investment they can make is in their education and self-development. Find them an age-appropriate book about money and encourage them to read it together. Check out this awesome list of books from Amazon.com about kids and money.
Just like sex, your kids are going to learn about money somehow or from someone. Don’t you want to be the one to teach them??
Click here to read Darren Hardy’s entire article.
Kevin, a fellow Twitterer and author of the great blog CreditShout, also posted an excellent article called “Teaching Your Children How To Control Debt.” Check it out for more thoughts and advice about this important topic!
Comments
5 Responses to “Start Educating Your Kids about Money Now!”
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thanks for the article - all great tips indeed. I think we all need to sit back, evaluate our situation and better yet, figure out the best way to share these important lessons with our children
Andrea:
Thank you for your feedback! And, what I’m seeing with my own son is that by far the best way for me to teach him is by my own example. There has been a huge difference in how he (and I) views money since we’ve been using the Money Merge Account program.
Mrs. MM
The Monetta Young Investor Fund is a great way to get kids involved in the savings process and should be a parents first choice when saving for college. A 529 plan can be talked about and has certain tax advantages but lacks an educational component and college tuition credit program that this fund has.
Bob:
Thank you for your comment. I’m sure your information will be helpful to some of my readers. Please check back frequently.
Mrs. MM
Another positive point to teaching your children about money is that if you take the lessons seriously, you just might learn something yourself. Of course, the one point I love the most is teaching your children about multiple streams of income.