Piggy banks, chore charts and job magnets: all popular ways to teach kids about money. In fact, most parents introduce their kids to money using one of these methods. It’s how I got my first introduction to saving and spending.
Those methods might work when kids are four, but too many parents haven’t transitioned their kids to the next level.
Do you have a teen who knows how to fund a savings account for the next video game but is light years away from truly understanding how money works?
Less than ten years ago the world came to grips with the fact there were millions of adults who didn’t understand basic money management.
Adults who didn’t know how to balance a budget.
Adults who didn’t understand how much house they could really afford.
Adults who banked everything they had on money they hoped would come.
DO NOT make this same mistake with your kids. Do not sit idly by thinking that because they know how to put money in the bank that you can sit back and relax. Their financial education is just beginning.
If your kid had to financially make it on his own right now, how would he do?
- Would he burn through his savings account while learning to manage money?
- Would he be so afraid of running out of money he wouldn’t know how to spend it?
- Would he burn through money paying late fees, transaction fees and interest charges?
How would he decide where to spend his money first? To prioritize his expenses? So far he’s only had to pay for the things he wanted in life and maybe an occasional gift for a friend. How will he handle being on his own?
Does the thought of this scenario make you panic? The good news is, unless he’s 19 and already on his own, you can still fix this very real problem.
We have so little time to spend with our kids. To teach them what they need to know, we have to focus on what’s important, right now.
But where do your priorities lie?
Do they know how to slide into second but not how a debit card works? To play one of Beethoven’s symphonies but not how to balance a budget? It’s time to face (ahem) the music. Learning to manage money IS a life skill.
When I graduated from high school I had a nice savings account and an excellent entrepreneurial education from my self-employed parents. In the podcast you’ll hear how this formed my spending habits in college. I have a feeling you might be surprised.
If you think your kid is doing well handling money, ask yourself how much he’s been challenged. How much has he been asked to pay for? What happens when there is a wrench thrown in the plans?
We make choices in life. All too often one of those choices is to teach kids about money later because there is too much living to do right now. Besides, your kid doesn’t really have a problem with money, right? He saves his birthday money and knows he needs to save to buy something he wants. He understands wants versus needs.
But what about when his needs start to take up more of his money? Will he have the experience necessary to understand that the amount he can spend on wants must decrease?
Will he understand that a coffee drink from the shop on the corner isn’t a need just because he needs it to stay awake in class?
Think he will?