It's a funny world we live in. Our kids go to school. They learn how to add 2 + 2 (in a very convoluted manner), learn Algebra and maybe Accounting. But they are NOT taught anything about money.
They don't know how to write a check.
They don't know how to balance a checkbook.
They know NOTHING about credit card interest or payments. A credit card is just free money to them.
They don't know how to pay off student loans. How to bail themselves out of credit card debt.
They don't know anything about savings or retirement.
Basically…when it comes to money….kids know nothing.
And guess what? Those kids grow up and become young adults. And then older adults. And then they are old…with no money.
And behind them is a trail of financial mistakes. And they are just wishing that someone had taken the time to show them. To teach them. To help them.
Did you know that a child's habits are set before age 9? Business Insider has a great article on this subject for you to read.
Which means, as parents, it is our job to do the teaching. Kids observe and learn. They watch what you do and that is what they do. If you manage money well, they will. But, along the way, you need to teach them.
I know I know…talking about money is taboo. But it should not be. Why hide it. That does not mean that if you are wealthy they need to know your wealth. You don't need to tell them that you are one paycheck away from eviction.
You can tell your kids that money is tight. In fact there isn't much to spread around. And work TOGETHER to figure it out.
Both she and her older brother witnessed our process. We put a budget in place. We sold things. We skinnied down our expenses. And we tried to save. We had enough money to live on for 9 months. That was a lot…but definitely not enough.
Fast forward to a month ago. It came up in conversation that, when my daughter was in high school, she was on the Homecoming Court. And she remembers not being able to get a ‘proper' dress or her hair and nails done. And, to this day, it irked her. Why not?
When I explained that we just did not have the money for all of the luxuries at the time she definitely understood. She only wished I would have told her at the time. Rather than just saying no. I should have talked to her and not just ignored the lack of funds.
Learn from me. Be honest. And be kind.
This is such a complex question. Check out the following posts:
First…you need to figure out how to spend and save with your own money. If you need help check out all of the Personal Finance posts I have for you.
Once you have it basically figured out, invite your kids into the mix.
Show them a checking account. A debit card. A credit card. Now, at age 9, they won't understand. But, as you shop you can tell them that the cards are like money…and show the transaction in the account.
Explain that money does NOT grow in a machine. Show them how you put the money in…so you can take it out.
Unless you are living on the financial edge and ready to file bankruptcy at any time….you do NOT spend wildy. You look at what you have, what you need, and you make choices. Your kids can be taught the same thing.
Set up cash envelopes (great post HERE). Spend from those envelopes. And when they are empty…no more spending. This is especially helpful if your kids want to go and do all weekend and each item costs money. Work together and figure out how much everything is, show them the available cash, and then choose. Such a lesson here1
Kids will learn about money from someone. The best person to learn from is you. And, if you don't know how to do that, find someone who does (like me).
Start with the basics and move into the more complex matters as they get older. Credit card interest. Student loans. Buying a car. Saving for retirement. ALL of those things.
I have a great post…'How I Taught My Daughter to Budget.' She was 10 when it was put in place. Check it out.
I am praying that we have a financially savvy generation of kids on the horizon…because you took the time to figure it out with your own kids!