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Teaching Kids About Money

Teaching Kids About Money


Learning Money Activities For Kids

 

In today's episode of Free Your Mind Online, we will talk about money and children.  This subject has been talked about on this site before, but I truly believe that it is worth going over again.  As a matter of fact, if you have a young child... now is as important as ever to teach him/her about personal finance.

Now, this of course is not something that we all don't know.  But, like all good financial habits there is a glaring problem.  If we all know we are supposed to teach our kids about money, then why don't we?  Well, there can be a lot of reasons.

Don't Have Time

We live in the hustle and bustle age where quality time with children is often at a premium.  Parents often work more than one job just to get by, and unfortunately the kids suffer.  But whether its using vacation time, or getting one hour less sleep... taking time fulfill your responsibility to your children is something that can not be glossed over.  You may have to make time.  We will also get into some ways to teach children on the fly in this article. 
 
Taboo

A lot of times, speaking to children about money is a no no in the family.  Parents often want to shelter their kids from the harsh unforgiving truths of the real world.  But as a result of this, our naïve children end up getting “played” when they get older.  Spending some time going over some reality will not ruin your kid’s childhood.  We will also get into some ways that your child can learn finance and have fun too!

The Blind Leading the Blind

A lot of parents don't sit down and talk to their kids about money because they themselves are broke!  They themselves are in terrible situations financially and they don't feel worthy to talk to their kids about money.  It's hard to teach what you don't know, and I understand this concern because... "Don't do what I did." is not a valid lesson to teach.  But... consider the following question.  WHAT IS THE ALTERNATIVE?!

There is no such thing as a child who hasn't been taught.  You see, if a boy doesn't have a father in the home, then the man that that child encounters (on TV, on the radio, out on the street, in the classroom etc) will become his father.  But what’s really deep, is even if the boy has a father, these things will still influence him.  The same applies to any child.

So if you are raising a child, you need to take a proactive approach.  If you don't teach your kid about money, then the TV, the internet or whoever else is out there will.  Now... do you want that?

And also consider that most people know what, at minimum, what some good financial habits are, but most of them don't execute them.  This is because (in short) we have been trained by the media mind control machine to do things that we know make no sense.  A good example of this works is "The Story Of Stuff" and also "The Conspiracy of Home Loanership."  In the end we are being programmed unconsciously to act a certain way. 

So we have to intercept this machine before it gets to our kids.  Because the machine will get to your kids!  Just like it gets to you.  Every place that you go and shop, your activities are monitored.  Every online transaction that you make is tracked.  And the same thing goes for social sites like MySpace, Facebook etc.  Consider the following article on weakonomics about how we all are targeted.. 

How to Teach Kids Money

So how do you teach your kids about money?  Do you design a kid’s money management course?  Similar to having your first conversation about the birds and the bees, talking to your kids about money can be an awkward thing to do.  But there are some ways around this.  There are plenty of opportunities in day to day life to explain money to your children.

Go Shopping Together

Parents often shop with there kids, but they don't realize that this is a great opportunity for a teaching moment. Going shopping is often times the first experience a child has with money.  Parents often complain about how kids think that money grows on trees and that they don't understand the process it takes obtain it.  But whose responsibility is it to teach them that?  Going shopping is a great opportunity to teach children about spending smarter, comparing prices, using coupons, getting things on sale, and getting the best value for what you buy.  You can also teach them about value (which can include warranties, repairability, quality etc.)

If you use a credit or a debit card, take the time to teach them how those plastic cards work.  Let them know how that money is not free, and how they will have to pay it back, plus extra if they don't pay if off right away.  Teach them how to verify charges, monitor their accounts and protect against fraud.  As a matter of fact, that may be a good time to explain the difference between all those different types of currencies (cash, checks and credit).

Then from there, it will be easier to move into the phase where you teach about not wasting food, eating leftovers, valuing purchases and the difference between wants and needs. At that point they realize that it "costs" to get those things.

When you go shopping and don't teach, the child will automatically believe that there is no cost involved and that everything is given out for free (especially if they don't see cash leave your hands) because that's all they saw!  Then they will be upset when you don't get them something (feeling like maybe you just don't want to).  And this of course will be your fault.

Talk About Money

Are you and the spouse planning a vacation?  Or are you planning a big purchase?  Sometimes it can be a good thing to let your child hear or “overhear” you talk about money.  When they hear you go through the process of how you will save money, get more value, and make things work, it can help them to understand better the connection between money and purchases.

Give an Allowance

Giving an allowance to your kids is a great for teaching kids about money.  First, they will realize that you have to work in order to get something.  And you can explain to them how you also have to work to bring in money.  This is also good for teaching them about managing money.  Break up your allowance into coins and bills so that a child can put there money into money jars, piggy banks, or envelopes.  They can then label them food, clothes, entertainment, savings etc.  This will be the time to teach them to save their money.  If you give them $5.00, make sure that at least a dollar will go towards saving for something.

Now, you can give them money for doing chores, or you can be creative and award them for reading books (and reporting them back to you), learning new things etc.  It's however you want to do it.  You can automate this online also if you like. Doing this will then lead you into the next phase which is...

Let Them Do a Cash Flow Plan

You can now have your child put together a cash flow plan (or a financial journal).  It can be really simple if the child is younger or more complex if the child is older.  They can simply put there weekly allowance on one side of a sheet and put their expenses on the other side. An online_money manager _software is a great and easy tool for kids to pick up

This can lead to them having a savings plan.  A piggy bank or a money jar will be good for a really young child and you can have them open up a savings account if the child is older.  And then at this point, they can set goals (short term and long term).  Review the cash flow plan and the goals with your kid periodically.  By the way... Grown folks need to do this also!

Don't teach your Kids To Be Poor

This is so important. Keep your "Hate" to yourself.  A lot of people are frustrated with their current situation in life, and are resentful towards those who are successful.  They are mad because their boss is dumb, and lazy and yet gets paid more than they do.  This is a reality in the matrix we live in here, but don't pass that negativity on to your kids! Consider the following article, “Do You Teach Your Kids To Be Poor?” in MSN Money.  Here is an excerpt from it.

"Growing up, my folks were poor," Gorman wrote. "I learned that all rich people are evil, all corporations are rich, people who are 'well off' (earning more than around $50,000) were overpaid and lazy."

If you're taught that wealth is the result of luck or misdeeds, what would motivate you to handle money responsibly, grow your income and increase your net worth? Gorman eventually realized the shortcomings of her parents' worldview, but it still affects her."

You want your kids to have a healthy attitude about money. YOU NEED TO HAVE ONE TOO (But that is a different story).  Your kids attitude towards money will affect everything they do going forward.  Otherwise, all is for nothing!

Set a Good Example

Of course, the best way to teach your kids about money is to lead by example.  So it will begin with you.  If they see you do the right things, and then succeed, then they will follow your example.  So while you are helping them, help yourself also.

Money Activities for Kids

Another way to teach kids about money is games.  Kids love to play games, right?  The following are some great resources that you can use to teach money.

Board Games

Online Games

Printable Play Money

Entrepreneur Games for Kids

Other Resources

 

Well... I hope this all has been helpful.

So until next time,

Free Your Mind.... Online

 

 

Matt Mason

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