Should We Teach Our Kids About Money?

I am constantly asked why is it so important to teach our children about money?

Shouldn’t we just let our kids be ‘kids‘ and let them worry about money after they grow up?

Some people say, “Mary is so young. I want her to enjoy being playful and innocent. Money is a worry for grown ups, not children.”

These are very good questions and I entirely understand why concerned parents ask these sort of questions.

I say, “We’re raising a whole generation with ’loser’ stamped on their foreheads because we as parents are not teaching our Kids about money”.

We assume as parents that their schools will teach our children everything they will need to know to be able to become independent young adults but we forget that ‘teaching children about money’ is not in the school curriculum.

Your job as a parent is not just to keep your child happy. You’re raising a future adult who needs to be able to deal with adult  matters. If you teach little Timmy how to handle money responsibly, then as an adult, Timmy will be better equipped for a richer life.

Look at the statistics below:

• 19% of Americans between the ages of 18 and 24 declared bankruptcy in 2001. (USA Today, 2001)
• The fastest growing group of bankruptcy filers are those people who are 25 years of age or younger. (Senate Committee on Banking, Housing and Urban Affairs, 2002)
• Over 80% of undergraduates have at least one credit card and nearly 50% of college graduates carry 4 or more credit cards. According to the Department of Education, the average balance carried by these students is more than $3,000. (Senator Chris Dodd, CT)
• Did you know that the number one reason that young couples divorce today is because of money related stress?

These statistics show us that many kids aren’t being taught how to handle their money. Young people are often making mistakes with the zeros at the end of their amounts. These mistakes sometimes take years to overcome. Teach your kids how to handle money while they are young, and they won’t make these costly mistakes later on in life.

As you can see it’s vitally important for us to be teaching our children about money while they are young enough to build great financial habits.

That is why I now am actively teaching my children about money.

So where to begin?

I simply suggest you begin  by encouraging your child to come up with a creative way to earn their own money, so they will feel the pride they deserve from their own efforts.

Then I suggest you encourage your child to split their money into Four categories (or piggy banks):

1. Savings (for that rainy day emergency)
2. Investing (you can let them start with simple small stock investments in quality stocks)
3. Charity (teach your child now while they are young to donate some of their money to assist others so they won’t turn into Scrooge! AND they will get an incredible sense of responsibility toward humankind and nature, and that will only strengthen their characters and help them in their day to day battles in life)
4. Spend the rest, QUICKLY! (let them feel the rewards of their hard earned cash instantly so they stay excited to continue along this entrepreneurial path.)

I hope this has been helpful and look forward to hearing your comments or other suggestions.

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