“Teaching kids sound financial habits at an early age gives all kids the opportunity to be successful when they are an adult.” – Warren Buffett
April is Financial Literacy Month. It’s also tax month and money is on the mind for most of us, for better or worse. Whether how to spend it or how to save it, money is in all of our lives, a connective tissue that directly affects our quality of life.
I have a friend who recently lost a large sum of money. He lamented, “Why didn’t someone teach me when I was young how to handle money?” It got me thinking how important it is to teach our children good money habits early. It’s closely tied to building habits of responsibility, which are directly related to success in life.
Financial literacy is a skill that also ties in nicely as our children learn numbers, counting and math. As with all learning, we grow as we go. Build financial literacy into your child’s future by beginning with a few simple steps.
1. Family chores are a good place to start.
Neale Godfrey, chairman of Children’s Financial Network, Inc, recommends starting your kids as early as 3 with two types of household responsibilities:
Good Citizen of the Household chores: They don't get paid, but learn the valuable lesson that contributing to community well-being is the right thing to do.
Work-For-Pay chores: The Work-For-Pay (allowance) teaches them how to earn and budget their money. These are real-world life skills that will carry them into a successful adulthood, where knowing the value of their own worth and what to expect from others are keys to a brighter financial future.
When I was growing up, my weekly allowance was tied to completion of my weekly chores. The understanding that good effort and keeping your word are rewarded goes a long way toward becoming a responsible adult. For more on why responsibility matters, see my blog on the Marshallow Test.
2. Be a good role model.
“Two things define you. Your patience when you have nothing and your attitude when you have everything.” I came from a family of modest means. The standard joke my parents used to say was, “Here’s a quarter. Go get yourself something special.” Fact was, my siblings and I often found special things that didn’t cost much but we enjoyed to the hilt.
Life is more about attitude than money. Living within our means meant enjoying simple things, while dreaming big enough to know that within each of us, we had the ability to live the lives we desired. Money is a tool, not a limitation. Dream big, work hard, play hard. And educate yourself about financial management. It is a learned skill. If you feel at a loss when it comes to money (as many of us do), consider working with a financial planner. Confidence has so much to do with success.
3. Talk about money with your children.
It’s strange, but we are often squeamish about money, whether saving it or discussing it. But in reality, it’s just a matter of knowing how to handle it. Encourage hands-on skills when it comes to saving. Here is great site for parents:http://moneyscholar.org/cart/index.php?main_page=page&id=8&chapter=0. It offers a piggy bank for kids that has four chambers: saving, giving, spending and investing. Another valuable resource is Warren Buffet’s Secret Millionaire’s Club, a tool for teaching kids about money and investing.
Here’s to your family’s financial health!