So let’s just face the facts. We teach our children how to play ball, how to ride a bike, how to read, and so on yet many parents do not teach their children the importance of money management. As parents, we make sure our children have all their needs met and most, if not all, of their wants met. But why is it that we don’t make it a priority to teach our children proper money management skills?
I have read article after article expressing the need for personal finance and money management skills to be taught in school. I happen to be fortunate enough to teach high school students personal finance skills. It is often apparent which students come from families that teach their children the skills needed to manage their finances. More often than not, though, children have very limited knowledge of money management. I feel we are doing them a disservice by not preparing them for real life.
I would like to give you a few strategies for teaching your children the financial concepts they need to know. Let me just tell you from my experience that children are much smarter than we give them credit. I have found that most students are eager to learn how to handle and make money. Here are just a few ways you can begin to teach your children important financial information that will help them throughout life.
First, I would introduce the topic of saving money and show them examples of how compounding interest works in their favor. Here is a good example that can be used to begin with. Tell your children you will match a percentage of the amount of money they save. If your child saves $5 a week you could match that with $1. This would give them $6 per week and would hopefully show them how saving is beneficial but also the interest or amount you match is important for building savings and wealth.
Second, you could take your children to the bank or credit union to open a savings account then make it a priority to take them to the bank or credit union every week to allow them to make a deposit into their savings account. I remember as a child going to the bank with my savings passbook. The teller would stamp the date in the book, write in my deposit amount, and then the balance of the account. This is probably how my interest in saving and earning money began. Oh, and as an added benefit I would receive a piece of candy! It was a fond memory that also taught me to save money.
Finally, find teachable moments in everyday life. Use daily opportunities to teach your children money management skills. This is a strategy that I have implemented time and time again. An example of this strategy is having your children help with grocery shopping by making a list of items you need but with a specific budget. Another example is to take your children with you when you are negotiating the purchase of a higher priced item such as an automobile or home. I remember as a child going with my father to purchase a car. At first I thought he was mad at the salesman but I eventually realized he was simply trying to negotiate a better price. My children have learned to negotiate from being with me when purchasing items. They have learned to watch my gestures in order to determine whether or not I have made a good deal. Teach your children the art of negotiating. It pays off.
Use these strategies to begin the conversation of money management with your children and even your nieces and nephews. Give them a better start in life than you had by being proactive in the area of personal finance. Don’t leave it up to the school systems to teach your children these skills. Our future and theirs depend on the decisions we make today so decide to help the future generations become financially smart! It’s worth the investment!