Financial Freedom For Kids ~ Basic Blueprint
If you’ve been following along and reading other articles on this website, you may have read this article. It dives into my personal past regarding how my brain was wired to think about money and finances, and how over the years, I discovered that I had very little financial intelligence. If you haven’t yet read that one, you might want to hop over and read it first. I promise you’ll better understand the content in this article if you read the precursor. Go ahead! I’ll wait for you to come back!
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Fortunately for me, I was able to understand the significance of where my younger self was led astray and was able to correct the path for my future and my children’s future before it was too late. You see, my teenage years were laced with falsities regarding money (or lack thereof). My parents worked their asses off to put food on the table for my two siblings and me. My dad was rarely home (he still works all the time) and my mom took whatever job she could find to help supplement the family’s income.
My dad was very proactive in reminding me that I didn’t need to worry about taking out loans for college because I had my whole life to work and pay off my debt. This, of course, was after the many discussions of how I must get good grades in high school, be involved in every extracurricular opportunity possible, find a good college, and use that education for a lifelong career. Just imagine everyone’s delight when I graduated with a teaching degree. I was set for life - or so we all thought.
Hindsight is always 20-20, isn’t it? Oh, the things I wish I could go back and change. I would have been more diligent in seeking answers on my own instead of relying on my family members, who were raised the same way they were raising me: get good grades, get a higher education, work the rest of my life, and when I retire, the government will take care of me. It’s almost laughable now, but I’m certain my younger self would have told me to shut up. I trusted my parents and no one could tell me differently.
The great thing is, they weren’t wrong! They pushed me to be successful, and I did become a teacher, paid off my student debt in record time, and went on to raise a family. They are not to be faulted. Besides, you don’t know what you don’t know. I don’t hold them accountable for any wrongdoing. I only wish to do better for my own children, knowing what I know now.
BUT WAIT!
What if, as parents, we’re financially intelligent enough to help guide our children on a path that is more likely to promise a brighter future? What if there is no push to excel in high school to graduate and continue an education at a university? What if we realized that our children have the potential to retire by the age of 40? What if they learned the difference between assets and liabilities and were able to build upon a solid foundation?
It’s not too late, friend! Now before I share with you some of the things I have learned, I am asking that you don’t take my words as your sole advice. As always, I would encourage you to seek out more answers. Dig a little deeper and learn for yourself all that can be learned from trusted and knowledgeable financial gurus. I am not an expert by any means, but I do think that what I have to share with you could be a great starting place for you and your children. If you’re ready to start helping your children build a bridge to a future packed with possibility, then please, read on!
I could write for days on this topic, but I won’t bore you. What I have, instead, are the nuts and bolts of some things I have learned, witnessed from my own children, and have implemented in our home. In doing so, I have gained loads of insight myself and have been able to learn alongside my children. We’re all becoming successful and it is such a rewarding process. I promise that even if you only try a couple of these ideas, you’ll be impressed by the results, and you and your children will be better off for it.
Inquisitivity Sparks Intelligence
Obviously, you’re not likely going to get very far if you’re speaking to an infant in terms of money and financial situations. Even still, you may not catch the interest of a five or seven year old. As a previous educator and mother, my own advice is to watch for signs from your child as to when he or she is ready to learn more. Children are inquisitive by nature. If there is interest in learning, you’ll know about it. Your child will begin asking questions and when you begin answering, you may find that you’re fielding more and more each day. This is excellent, and when it comes to money, all questions are great questions.
Do you believe that your child was born smart? (I hope you’re nodding your head!) As you know, every child is different. Each child is born with a uniqueness of qualities and thus, should be treated as such. Each develops at a different rate and learns accordingly. For my own children, my daughter, the older of two, began asking questions around the age of seven. By the time she was nine, my son, then five, was learning and asking questions, too. My daughter was never extremely interested in learning things at school. She always seemed to know it all and didn’t want to be taught. Of course, she’s a little stubborn and only thought she knew it all, until seeing some testing results in the classroom (and that proved otherwise). My son, on the other hand, surprised me and learned to love learning and excelled within the classroom setting. Two children, brought up in the same home, and yet, so many differences.
Be willing to get to know the intricate minds of your children. Embrace the differences. Figure out ways to encourage them in the school system, but help them to see that perhaps the future doesn’t need to include expensive schooling at the end of high school and that’s okay. By introducing them to the facts about money early on, they’ll have a head start over peers. Always encourage, be positive, and answer questions they have. The world of money is not a secret.
Learn With The Littles
If you’re anything like me, you don’t know it all. I would never claim to know it all in this ever-changing world. What do you do if you don’t know the answer to a question? Well, the easy solution would be to answer with an, ‘I don’t know’. But how could we both learn and teach our children? In my opinion, it is okay for our children to know that we don’t hold all the world’s answers. By instead saying something like, ‘I’m not sure, but let’s find out together’, your child is seeing firsthand that it’s okay to not know everything and that there are resources available to help. We do live in the information age.
My story about gaining some financial intelligence happened in a very quick way. Events that led to my soaking in anything and everything stemmed from not being happy with my career as a teacher, knowing there had to be something better, a supportive friend who recommended some books to read, and a very inquisitive daughter. No matter how it all happened, the point is, this was the path I was taken down after I became a mother. My eyes have been opened to so many possibilities and the best thing is that I’m still learning as I’m simultaneously teaching my children.
The best way to learn anything is to teach it. If one is very interested in genuinely teaching something (anything) to someone else, what needs to take place? Well, if you don’t want to come off as a dunce, then it’d be best to learn a little bit ahead of time, right? This way, you’ll at least sound like you know a little bit about the subject. But if you really want to teach something extensively, you will need to research and learn as much as possible first. In turn, if there are things that come up during the lesson being taught that is a stumbling block, then by all means, use it as a teachable moment and learn with your student (child). I say this because i have a feeling you’re reading this and wondering where to begin as you may feel less than adequate in your own financial intelligence knowledge base.
Bonus points are awarded to you for being here, right now, reading this article. It shows that you have a genuine desire to put forth some effort and help your children learn to be financially independent. You’re on the right track, and perhaps you’re struggling with where to begin.
Engage With Entertainment
If you were to poll your elementary school child, what would he say was his favorite part of the school day? I would be willing to bet that one of the answers you hear is either recess or phy-ed. Why do you think the answer likely isn’t math or reading? My theory is that recess (even though it’s not technically a class) and going to the gym is fun for your child. In those environments, kids don’t need to worry so much about sitting still or being quiet. They’re able to express their feelings and release some build up energy. What if you could make learning about money fun for your child?
There’s good news! You totally can make learning fun at home. A word of warning before you try this: you may have fun also! Children also like taking field trips at school, right? Why not have some at home. Create trips to the bank, grocery store, shoe store, etc. While there, point things out. Introduce your child to the teller or loan officer at the bank. Explain what their role is in the building. When getting groceries, point out the differences in pricing for the same kind of food and discuss why you choose what you do. When shopping for shoes or clothing, advise your child to compare the prices from a department store versus a thrift store. Just taking regular outings together will begin to raise awareness on the topic of money.
After a few trips to the store, add some lessons at home. Give your child some tasks of looking at supermarket ads, planning a meal, and figuring out how much it might cost. Take them with you to get the items, have them handle the money to and from the cashier, and see what the difference was in their previous estimate compared to the actual cost. Have discussions about what could have been different or what went well. Do this often. It’s great practice and gives your child a little knowledge about learning what a budget is. In addition to this, you might find it beneficial to show your child a bill or statement. Let him see how much things cost and why it’s important to be conscientious with utilities (water, electric, etc.). You may see a decrease in utility expenses if your child understands the value of conserving.
One of the things I wish I could change would be to begin playing games with my children sooner. More specifically, the game of Monopoly should have been introduced to them at an earlier age. While as a child I enjoyed the game, I have to admit that as an adult, I really don’t care for the game as it’s very time consuming. It was because of this I put off playing it with my kids. I also figured they were too young to understand the concept. I’m here to admit that I was very wrong. As it turned out, my son, at six, is fully competent at understanding the rules and objectives of the game. Sure, it can take hours to finish an entire game, but it lends itself to some fantastic teaching opportunities. In our home, we play this game together regularly. It’s great exposure to financial terms and I’ve been pleased to see exponential learning occur! Don’t delay with this step; go get yourself a game of Monopoly, put on your patience pants, and introduce the game to your youngsters!
Consider Compensating Your Kid
Allowance. There. I said it. Perhaps I’m living in my own youth; the word doesn’t sit well with me. Of course it’s because I never received an allowance. My parents never had a penny to spare. It was my grandfather who would hand out the green bills for A’s on report cards. Regardless of where you sit on the fence about doling out money to your children, let me share with you my thoughts.
It absolutely depends on what your own goals are. Some wealthy folks may have an abundance of money and their idea of an allowance would be similar to a utility or mortgage payment. Let’s assume that you’re like me, careful about your spending and don’t have much in excess. Could an allowance be used as a teaching tool? You bet! Hear me out.
First of all, my advice is to begin small. When I decided to open my mind to the concept of an allowance, I knew I didn’t have a lot to work with. However, if done correctly, you can teach the value of money with just a few bucks a week. I don’t reward my kids for doing personal or self-care tasks. For example, getting dressed, brushing teeth, or going to bed on time are not rewarded via my hard earned cash. Why? They’re expected to do those things to keep themselves healthy. I also do not reward cash for grades. Why? I don’t want to convey a message that getting good grades will earn them money in the future; it won’t. I also don’t want to put any added pressure on my kids to do well in school. I already know they do their best.
As an adult, what do you get compensated for? More than likely, you’re employed. You do your job and in turn, you get paid. In our home, my children are task-oriented. We’ve established a timeline and a list of tasks for each to complete. Upon completion and inspection, my kiddos earn their wages (allowance). It varies from $3-$5 each week. I know it’s not much, but it is a start!
The learning and lessons don’t stop there! Each of my kids has two piggy banks. One is labeled NOW and the other is labeled FUTURE. Of the money each child earns, they’re expected to split it up equally into each bank. The NOW bank is designated for something they’re wanting to save for. It could be a toy, movie, etc. They will have done the research to see how much is required to save. Upon reaching the goal, I take my kiddos shopping. After all, it is money earned and they’re saving for something specific.
The bank labeled FUTURE is my favorite. After I learned the benefits of investing, I knew it was something I wanted to also learn alongside my children. At the end of each month, I require my kiddos to invest in their future. Through my online brokerage account, I have accounts set up for each child. This has been a little challenging at times, as it can be difficult even for an adult to understand, but we are doing our best. We have discussions about the stock market, stocks, bonds, ETFs, etc. My goal is to expose them to the vocabulary. We look at their accounts and check to see progress and watch the growth. Of course, it’s not a rapid growth, but it is steady and it’s compounding. When my kiddos realize that as they get older, you can bet that they’ll learn to value their money.
Something unique has happened with the aforementioned piggy banks. Once my kids realized how their money in their investments was growing, more questions came. My daughter, especially, wondered if it would grow faster if she invested more money each month. Guess what that led to? She began putting less than 50% of her earned money into her NOW bank and deposited the extra into her FUTURE bank. She’s learned this valuable lesson and it’s one she’ll continue to take with her as she ages. Her brother is also beginning to see this now which is so very exciting for this mama!
By including my kids in the investing process, they’re already years ahead of where I was at their age. We have several conversations about saving money in a bank or investing in companies. When they’re old enough, all of their money will be transferred to their own brokerage account, which they’ll be fully capable of monitoring.
Generate A Game Plan
As I’ve stated earlier, it doesn’t matter the age of your child. It’s neither too soon nor too late to be thinking about a feasible plan for your child’s financial future. One thing is certain though. Education is critical in the world of money. The main reason for this is that so little is taught about it in our school systems. If you want to do a great thing for your child, teach the value of money. Of course, while it does not solve every problem we encounter or have the power to create a life of happiness, it DOES provide choices, and that, my friend, is the point. Don’t you want your child to have more choices than you did or do? That’s what I thought!
As is with anything, consistency is key. If you’re thinking about introducing some of these concepts with your child, begin and do not stop. Use every possible moment as a learning opportunity. Don’t be afraid if you’re not confident yourself; you have unlimited resources available to help. Come up with engaging and fun activities for your child. Learn with her.
Educate via communication. As you learn something, share it with your child. When your child is mature enough, discuss credit cards and what debt means. The more you can consistently teach (and quiz) your child about money, the better prepared for the future she’ll be. The topic of money shouldn’t be taboo. It shouldn’t be anything to fear. Open your mind to the possibilities of giving your child more choices for the future. Can you even imagine if your son or daughter had the option to retire at the age of 40? What about 30? It is possible, friend, but you have to put together a plan and continue working towards making it happen. I am so excited for you! I wish you and your kiddos a very prosperous and financially fit future!
by Lyric Anders, writer