For those with kids, you want to empower them with skills and opportunities don’t you? You want your kids to no just live but THRIVE in life, achieving every goal and rising to greatness. In a lot of ways, it is not unrealistic to want the younger generation to have it better than us – better income, better house, better savings…just better.
How do we help to ensure that this happens? Money is a universal medium that aids in living, even thriving in life. When someone is smart financially, they open more doors of opportunity and choice. So raising financially savvy kids and teaching them about money and budgeting is a great and very important place to start in helping kids have a life in which they will THRIVE as adults.
Below are a few ways you can teach your kids simple lessons about money that will last a lifetime:
1) Actions always speak louder than words. You can talk to your kids until their ears fall off, but what your kids will emulate the most is not what you say, but what you do. Even those in tighter financial situations can have budgets. Teach your kids by word AND action through following your budget and not going into debt (buying on credit or taking out unnecessary loans). Be open and honest with your kids about your budget. Keep it positive though; avoid saying, “We can’t afford it,” or “We don’t have the money.” Instead, focus on the budget, and explain to your kids that you can afford it, but you are choosing to be wise in your spending by following your budget.
2) Pay your kids on commission. If you have the ability, pay your kids an allowance – based on commission. Make sure that your kids have specific and measurable responsibilities/chores. Pay them for each completed task (i.e. cleaning their room, taking out the garbage, vacuuming, etc.) You can even pay allowance based on schoolwork, school attendance, and grades. A smart person in Texas started with paying her kids $0.05 per hour they were in school, $5 for each class they got an “A” grade in at each term, and paid them for homework being completed. Paying your kids an earned allowance will then open up the opportunity to teach them about budgeting and saving.
3) As your kids get older, consider increasing the wage you pay them in allowance, even increasing it to the amount that you would spend on them yourself. Then put each kid in charge of his or her own budget. Assign every dollar to an expense from school supplies, clothes, friends and fun, personal, club dues, etc. Let each kid spend that money and manage it himself/herself. If they overspend or come asking for more money, resist the urge to agree; just say, “No.” Teaching your kids to stay within their budget while they’re young will increase the likelihood that they will follow a budget when they are adults.
4) Sit down and discuss goals with your kids. What are trips they want to take, or new toys they want to buy? Decide together on their goals. Write down each one and really break it down: how much is it going to cost, how will theyearn the money to pay for it, how long will it take to earn the money? Keep the goals, and make sure they are visible to the kids. Keeping each goal teaches them that goals take time and dedication. It also teaches kids to really evaluate what they really want versus something they only kind of want.
There are more ideas and examples of ways to raise financially smart kids in the articles linked below. Mostly, be open and honest with your kids, follow through on your word, and practice what you preach.