Financially Savvy Kids
June 7, 2012 § Leave a comment
Our kids. We hope that their lives will be free of trouble and pain. Especially, free of any trouble of their own making. If we neglect our kids’ financial education, they may stumble. Let’s talk about ways we can help those honeys. Even if we don’t feel very clever about money. As you’ll see, some things that pertain to money really have more to do with character.
Self-control – To save money we need to practice patience, self-control, learning how to wait. Delaying gratification for some future promise is the point of self-control. With our money self-control is demonstrated in the ability to save. Not hoarding, which is compulsive ‘saving,’ but real saving. We all have natural propensities, tendencies, to be savers or spenders. Meaning that we, as part of our natures, handle money more in one way than another. So for some of us delaying gratification, delaying spending, might be more challenging than others. Money tends, as the saying goes, to ‘burn a hole in our pockets.’ Helping kids understand WHY one might wait is a key point parents can teach.
Here’s one way that might work for you and your kids. The author of a 2009 Wall Street Journal article said he played ‘the soda game’ with his kids to great effect. Dad would buy his children a soda with dinner while dining out, OR he would give the child $1 instead. Have a soft drink with your meal or have a crisp one dollar bill. The kids, a boy and girl ages 10 and 14 at the time preferred the $1 and drinking water to the soda. They quickly saw the most important part of this deal to them. The children did not hesitate to have a soda purchased for them, but when offered the option they preferred the cash.
Parents who have given their children charge of their allowance, vacation money, etc, have found similar things. Kids can do without many pleasures when they have to spend their own money, though they are much freer spending yours if you offer to buy them treats.
Perhaps you think this is a manipulative way to teach children. I think it is tying money to real-life and makes spending money personal.
Risk- When we save, especially as we get older, we have the availability of investment options that may be involve a level of risk or safety and the associated earnings commiserate with those risks. Finding a balance that’s right for each person is a key job of a financial advisor. Helping kids understand various risk and the possible benefits of each risk will help them understand the broader world of investments and engage them in the possibilities in this great, big world.
Values– Of course you share your values with your kids. But when it comes to money you share your values when you serve in the community, when you give generously, when you make charity a way of life and when you share stories of hardship. Doing this teaches your kids about money and to help them value all that have instead, their blessings. Bring them to the local shelter to serve food. Tell them the story of your car that was the Barney Rubble-mobile with rusted floorboards or your old jalope with a gas can on the front seat because the car’s gas tank was rusted out.
Your kids will have trouble in life because trouble is just part of life. But wouldn’t be awesome if they knew more about money than perhaps you knew when you were younger? Many of say we wish we’d learned, but most of us don’t teach our children. You can better equip them. Get to it, parents.