Do you have young kids? If so, you might think about how to talk to them/teach them about money from time to time. I certainly do.
Recently my six-year old discovered Pokemon cards. His cousin (who is also six) happens to have a collection of them. If his cousin has them, they must be cool. So he feels that he needs to have his own collection.
“Daddy, can I have some money to buy Pokemon cards?”
The dreaded question a parent receives. I need money to buy xyz. Never mind that xyz is nothing needed for survival. But I really want it, so therefore, I should get it because I “need” it.
Money doesn’t grow on a tree in our house. I wish it did, but it doesn’t. Fortunately, I started the money conversations with him around age 3. As a result, he has at least some basis for the inevitable response when he asks for something.
He’s heard “no” several times now regarding Pokemon cards from both my wife and me.
Recently, he spent several days with Grandma and Grandpa. While he was there, he did a bunch of work for them. They gave him a few dollars in “compensation”. Thankfully, they put it in a sealed envelope and sent it home with him rather than just giving it to him outright. When we opened the envelope it allowed us to enter into a conversation with him.
I asked him what he wanted to do with his money. He responded: “I want to buy Pokemon cards.” Of course you do.
I then asked him if he wanted to spend the whole amount on cards – to which he initially said “yes.”
But then I reminded him of what we’ve been talking about over the last several years around money.
It’s simple – we teach him that when he gets money (whether it be from a job, or something else) that the goal is to first “save a little”, and then “invest, spend, and give away a little.”
Essentially, we are teaching him that when you get paid for work performed, it’s important to figure out how to wisely allocate that money.
He doesn’t fully understand the distinction yet between saving and investing, but we continue to talk about what it means. He does know that it’s important to not spend it all. We have a bank account for him at a bricks and mortars bank – so we’ll take him to the bank from time to time so he can deposit some $ - he finds that pretty cool.
When it comes to kids and money, we believe that it is important to start talking about money at a young age. They get bombarded with advertisements all the time. They see stuff other kids have, and they decide they need those things too. We can’t stop that but we can give kids some of the basic tools of good personal finance.
Key to this is teaching the importance of saving/investing, and resource allocation. If you spend all your money today, you won’t have the funds you need in the future for those special things that you really want (and sometimes truly need). Another cool thing is by teaching kids about savings and investing at a young age – they have their whole life in front of them – and when it comes to building up a nest egg, more time is always better!
In our household, we value giving back to our community. Over the course of the year we donate to several community-facing charitable organizations. This is a value we are working to instill in our kids at a young age. There are so many who can use a helping hand – and we aren’t shying away from teaching some of the lessons about giving when we have the chance.
TreviTip: Don’t shy away from teaching your kids about saving, investing, and giving at a young age. Building good personal finance habits early will benefit them significantly over the course of their lives.