Teaching Kids About Money (2024)

Hello all, welcome to another edition of the Forum Finanzia blog. Today, we’re not talking about mortgages, credit cards, or investments. Nope, we’re diving into something even more crucial – teaching our kids about money. Stay with us, because this, is a journey we’re all going to take together. And it’s important.

Now, I’ve spent a good chunk of my life navigating through the world of personal finance, but let me tell you, nothing – and I mean NOTHING – is as important as teaching financial literacy to your kids, early and often. But, when you’re not equipped with the right tools, well it can be so frightening that the discussion never happens. It’s like going into the woods without a compass. If we don’t guide our kids through this, they’ll be lost in the woods. We can’t have that, can we?

Now, I am not sure why this is not part of the curriculum in our schools, but it just isn’t. So, it’s up to you, parents.

The Early Beginnings – Introducing Money Concepts to Preschoolers and Kindergartners

Starting the financial education journey with your little ones might seem premature, but it is in these formative years that the seeds of financial wisdom can be sown.

The Clear Jar Strategy: Now, who among us had one of those little piggy banks? Cute, right? But here’s the deal – those pigs don’t teach kids anything about watching their money grow. So, my advice? Use a clear jar instead. That way, they see their wealth building. They see that yesterday’s dollar and five dimes, with a little patience and perseverance, turned into a bit more today. And we celebrate it – make it a big deal because we appreciate the value of a hard-earned dollar.

Give them some visuals too. 20 nickels, 10 dimes, 4 quarters. Help them identify. Show them the paper money too!

Be the Financial Hero They Need: Now, here’s a little wisdom – kids form their money habits between 6 and 12 years old. So, what they see you do with your money? That’s writing their financial script. If they see you swiping that credit card like it’s going out of style or arguing with your spouse about bills, they’re soaking that in. So, let’s flip the script. Show them what it means to manage money wisely, to have healthy financial discussions, and to live within our means. Because, trust me, they’re learning from you whether you know it or not. So, you may as well be teaching it, the right way.

Money Talks, But Actions Speak Louder: And when it comes to teaching them that stuff costs money, well, talk is cheap. You’ve got to show them the ropes. That means letting them take a few bucks from that jar, head to the store, and hand over their hard-earned cash for something they want. It’s more than a transaction; it’s a lesson in value, choices, and consequences. And that lesson is worth more than any five-minute lecture you give them.

Navigating Through Elementary School Years

As children grow, their understanding and curiosity about money evolve. But we need to provide them with fundamental, financial concepts suitable for elementary-age schoolers. We need to teach our elementary schoolers about the almighty dollar.

How to Teach the Young Guns About Money

Your kids are hitting that age where they think they know everything, so that’s your cue to roll up your sleeves and get down to the nitty-gritty of money talk. They’ve got the basics: spending, saving, and giving. But now, it’s time to add a little grown-up stuff to their financial education.

The Real Cost of Opportunity: First up, opportunity cost. It’s not just a fancy term; it’s a life lesson. Those new designer jeans or the video game? One of them will be a no-go. They need to understand that choices have consequences and every dollar spent here is a dollar not spent there. It’s about priorities, and it’s about understanding that money, much like your patience, has limits.

Commissions or Earnings vs. Allowances: Next, let’s talk commissions or earnings over allowances. I am not debating any parent that believes in allowances. If that’s you, no problem. My opinion is different. In my view, money isn’t handed out like free candy. It’s earned. Whether it’s taking out the trash or mowing the lawn, we’re teaching them that money comes from work, and a job well done is a paycheck well earned. You can be creative here too. Extra book reading, good grades, extra activities.

The Impulse Buy Battle: And oh, get ready for the impulse buys. “Mom, I NEED this dress!” Sound familiar? But we’re not running a charity here. If they want it, they can spend their hard-earned cash on it. And if it costs more than 15 or 20 bucks, let them sleep on it. Chances are, that must-have item today is tomorrow’s forgotten fad.

The Joy of Giving: Lastly, but most importantly, we’re teaching them the joy of giving. Because money isn’t just about spending and saving; it’s about helping others. Whether it’s tithing at church, a charity, or helping a friend in need, we’re showing them that giving isn’t just good for the receiver; it’s good for the giver too.

Steering Teenagers Towards Financial Independence

Now the teenage years. The teenage years are pivotal in transitioning towards financial independence. Let’s explore strategies to guide them through more advanced financial concepts and responsibilities.

Cultivating Contentment: Addressing the challenges of social comparison and fostering gratitude and contentment in their financial journey. Now, I get it, our teens are practically glued to those little screens, endlessly scrolling through the glamorous, filtered lives of their buddies, celebrities, and that kid who somehow affords a new car at 16.

And there it begins – the never-ending chorus of “Why not me?”

“Dad, why does Mark get a brand-new sports car while I’m stuck with the family Volvo from 2005?”

“Mom, Julie had a Sweet 16 that looked like it was catered by the Queen of England. I want that!”

“Every teen in Canada is heading to Florida or the Caribbean for spring break, why are we not packing?”

Life is not a competition. It’s a journey. And it’s high time our kids learned the art of being content. It’s not about the flashy cars, extravagant parties, or exotic vacations. It’s about appreciating what you have, understanding the value of a dollar, and not spending money you don’t have on things you don’t need to impress people you don’t like.

Banking For Teenagers: Now, when your kid hits the teenage mark, it’s time to introduce them to the world of banking. But we’re not just handing them a debit card and wishing them luck. Nope. We’re teaching them the ropes, showing them that with financial freedom comes responsibility. It’s not just about spending; it’s about managing, budgeting, and understanding where every dime goes.

College and University Savings: Non-negotiable: And speaking of dimes, let’s talk college and university. It’s never too early to get that college fund going. Summer job? Great! A portion of that paycheck goes straight into savings. We’re teaching them that investing in their future isn’t just your job; it’s theirs too. They put in the work; they reap the rewards – simple as that. This does not mean to say that parents should slack off on this. It’s up to you to save for your kid’s college and university education too! In a win-win situation, their education savings turn into a down payment on a home later.

The Student Loan Talk: Before they even think about stepping foot on a college or university campus, you need to have “the talk.” No, not that one – the “how in the world are we paying for this?” talk. We’re laying it out clear: student loans are a no-go. We explore every other avenue – scholarships, part-time jobs, – because a debt-free education is the better way. If they (or you) start in their early teens thinking they can finance their way through school, that is exactly what will happen. It doesn’t have to be that way.

Credit Cards: The Plastic Predicament: And when they hit 18 and those credit card offers start rolling in, we’re ready. We’ve taught them that debt is not just a financial decision; it’s a moral one. We don’t spend money we don’t have on things we don’t need. It’s a fast track to a life of stress and worry, and that’s not the life we want for them.

I like them having a credit card to help them build their credit rating and teach them responsibility. That is a must. But by now, they should know to never spend what you don’t have.

The Magic of Compound Growth: Investing might seem like a grown-up game, but it’s a game they need to learn to play. We’re showing them the magic of compound growth, teaching them that the earlier they start, the more they stand to gain. It’s not rocket science; it’s just smart, forward-thinking financial planning.

Making Money the Teen Way: And finally, we’re not just handing them money; we’re showing them how to earn it. Whether it’s a part-time job or a start-up venture, we’re encouraging them to take initiative, understand the value of hard work, and reap the rewards that come with it.

Final Thoughts

And there you have it. A basic blueprint for raising financially smart, responsible adults. It’s not about shielding them from the financial realities of life; it’s about preparing them to face them head-on, with wisdom, responsibility, and a good old-fashioned work ethic.

In the grand scheme of things, ensuring our kids can navigate the financial world is one of the greatest gifts we can give them. It’s not just about money; it’s about equipping them with the skills to make informed decisions and be self-sufficient, and maybe, just maybe, they’ll thank us for it one day.

And hey, I want to hear from you. How are you teaching your little explorers about the world of finance? Drop your stories, tips, and tricks in the comments below. Let’s navigate this wild journey together, and ensure the next generation is ready to conquer their financial future!