Why We Should Teach Our Children about Money

Max at his first credit union annual meeting - Age 6!

Max at his first credit union annual meeting – Age 6!

Most of us know that we need to teach our children about money.  However, there tends to be a lot of confusion around the subject.  Here we are going to take and in-depth look at why we should teach our children about money, our excuses for not teaching them, when we should not teach our kids about money and finally how to get started with the process.

Why we should teach our children about money:

  1. The younger they are the more they will still listen to you.  They have yet to hit the age where mom and dad do not know anything.
  2. The younger they are the less influenced by society they are.  As kids grow and get into school, watch TV and even watch you they become more influenced by what society teaches.  This is not always what you want to teach them and it becomes harder to teach them your views as they learn from other sources.
  3. When they are young the basics can very easily be broken down to a level they understand and will remember, not as many “ya buts”.  For example:  when we had the debt conversation with Max we used a transformer as a purchase example.  We then asked him if he would rather wait 4 weeks and save $10 or have us buy it for him right now and then he could give us $20 latter.  He honestly looked at us like we had three heads and said he would wait and only spend $10.  Even better is when we break concepts down to small understandable ideas, we tend to understand them better.  We have more “AH HA” moments with our own money.
  4. The younger the more ingrained and natural your teachings will be, so even if your child departs from the teachings they tend to come back as they have your lessons as a beginning reference point.  It lays the right building blocks so they don’t have start a new foundation when they get older.
  5. One of the most important components in saving to build a large investment portfolio is to start early.  The earlier we start saving the larger our nest egg becomes, even if we end up saving less than those who start late.  By teaching our kids about money today and how to save today, you are giving them the tools and lessons to begin saving for their future earlier.  So instead of waiting to save for retirement they can do it right out of school!
  6. The parenting concept of Love and Logic teaches that children learn more from making their own mistakes.  The earlier we start these lessons the more small mistakes our children get to make.  I would rather Max buys a cheap and poorly made toy than a cheap and poorly made car.  Same lesson, different scale.
  7. The more you know the more empowered you are.  Empower your child today!
  8. The more you repeat something the more it becomes fixed in your head.  When you are learning a new language you get better through practice.  The same is true when teaching your child about money, the more you can repeat a teaching the better your child will understand.  Repetition is good.
  9. Savings increases self confidence.  By teaching your children how to save and manage money you are increasing their self confidence.  One more way to give them wings to fly.
  10. Teaching them about money helps them be healthier.  That is right healthier.  Money problems increase stress; stress increases the risk of many diseases and causes many problems.  We give them vitamins and make them wash their hands; we also need to teach them how to avoid unnecessary stress.
  11. The more you talk about money the less of a taboo topic it becomes.  We only learn that things are not acceptable to talk about when we don’t talk about them.  Make it a part of your every day conversation and it will not be taboo.

Why we say it is too early to teach our kids:

  1. They won’t understand – with the obvious exception of the super little ones (I call this under about 3 ½) we typically don’t give our children the credit they deserve for understanding ideas.  I am constantly amazed at how much Max not only understands but can apply lessons to many areas.  Go ahead and start small and easy early on.  You can always cover the topic many times till they understand.  See item number 8 from above!
  2. I don’t have the money to pay commission.  Obviously we don’t want to through our budget off by paying our children money.  However, you can still talk about money while you are working on your budget.  Talk about how coupons help, let them help you write out deposit slips, talk about how you can make money.  Teaching our kids about money does not have to include giving them money, financial education is about much more than just allowance/commission.

When you really should not teach them:

  1. You are not ready to commit to teaching them on a consistent basis.  If you are not willing to make this a regular thing, then don’t start.  If you set up a chore chart and never talk about it or have them do anything then you are defeating your original purpose.  In fact you are unconsciously teaching that learning about money is not a priority.  Only start when you are ready.
  2. You have negative emotions associated with money.  This is different than you needing to work on your own financial health.  This is about your money beliefs.  Do you believe money is evil?  Do you believe that it is wrong to accumulate wealth?  If you have a belief that when transferred to your child will harm their chances of success don’t transfer that belief.  Instead take the time to figure out why you believe that and work on changing your beliefs.  Then teach your child.

So how do I start teaching them?

  1. Work on your own money issues.  Here are a few resources to get you started:
    • The Energy of Money – great book for clearing your beliefs around money.  Everyone will benefit from working through this book. (I especially love the section on forgiveness.)
    • Excuses Begone! – a great book for helping you eliminate your excuses that stop you.  Not only great for money problems, but fitness issues and anything else you are struggling to achieve.
    • Some of our blog posts will help you out – Are your emotions hurting your money
  2. When you are ready for the teaching part, check out the kids series on our site starting with: How to Teach Your Kids to Earn Money, and How to Teach Your Kids to Manage Money.  Or our Kindle book on how to teach preschool kids.
  3. Talk about everything.  Much of what we do throughout the day has money implications, talk about them.  Just a few things to get your ideas flowing: coupons, sales, taxes, shipping if ordering online, what a bank is, and saving for things like vacation.  Make it a habit to think out loud.
  4. Most importantly, ask for advice when you need it.  Get ideas from other mothers and fathers, read books and blogs.  You don’t have to go it alone.

Hopefully this has helped you decide to get started with your kid’s financial education or on working on your own beliefs.

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  1. I think your kids will form their opinions and beliefs about money based on how they see you behave with it…..just like everything else in life. There are so many opportunities to teach your kids about money: the grocery store line, window shopping at the mall, or getting the utility bills in the mailbox. Great article.

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