Kids Need to Learn About Money
As a parent of daughters ages fifteen and ten, I am quickly realizing that kids grow up way too fast. We’ve recently watched as close friends move their children to college and can see how quickly this time approaches for our family. This has caused my wife, Tami and I to assess not only what we want to experience with our daughters, but also to recommit to the personal and financial truths that we want to instill in our girls before they face the world as independent young women.
We all know that the economy has been rough recently. Many families have had difficult discussions around the dinner table about how this translates to their vacation plans, back to school budgets, college choices and overall lifestyle choices. In a survey earlier this year, nearly 80% of teens polled by Junior Achievement said that their parents were talking more than they were used to about the economy. In a new survey by Capital One, half of teens interviewed said they want to learn more about money from their parents. Unfortunately, only 24% said that their parents talk to them regularly about financial topics.
I can relate. I spend my work days helping people manage their money and investments. The last thing I really want to talk about when I get home each evening is managing money, but I also realize now, more than ever, I have a responsibility to introduce healthy and responsible money management traits to my daughters. Countless studies show that we as a country have done a poor job managing our money, our debt, and our household budgets. How can we change this trend for our kids?
Parents should take the lead in helping kids learn the seven money skills I think every child needs to know before leaving home:
1. The pride of making sound spending decisions – Nothing makes a child a more knowledgeable consumer than having to get along on $10 a week.
2. The skill of maintaining financial information– Every teenager should have an account with his or her own money and know how to balance it.
3. The reward of meeting financial goals – Kids need a reason not to spend, whether it’s saving to buy an ipod or a night out with friends. Consider matching all or part of what they put aside.
4. The magic of compounding – Small amounts saved when you’re young will eventually grow into big piles of money.
5. The value of savings– Kids need to understand the importance of having an emergency fund for unexpected expenses.
6. The importance of giving- Teach them to make a difference. Giving means money, time and talents.
7. The dangers of borrowing and paying interest – Take compounding and look at it from the negative side. It can work against you if you borrow.
Tami and I will face, sooner than we would like, the excitement of packing our daughters up for college, moving them into a dorm, and that lonesome drive home as they begin their journey into their future. It’s our responsibility to make sure they have the tools to succeed in that environment. We have the same responsibility to make sure they are equipped with the information needed to have sound financial futures as well.