Why should I teach my children about money?
Whether we like it or not, money plays a part in everyone’s life. People either don’t have enough, they have too much, they are working hard to earn more or are looking for ways to spend less.
Money can be a stress, but it doesn’t have to be and it certainly doesn’t have to be a stress in the future of our children if we teach them the right practices.
Teaching children about money, in my mind, is no different than teaching them about morals or religion—it’s an extension of our values. We can show our children how to spend, save and give wisely.
Eliminate the stress
One of the situations I run into with my clients the most is simply mis-managing money; and after working with Dr. Matt Morris, I have learned that money is the source of stress in many relationships and families. Wouldn’t it be great if we could teach our children how to better handle their money, so the cycle of stress stops?
When to teach children about money
While anyone can learn new money management practices at any age, it’s easiest if these habits are instilled in children at a young age. If we wait until a child turns 18, for example, they may have 18 years of bad habits—spending beyond their means, not saving for the future— that will need to be re-learned.
If we start teaching our children simple, concrete ideals, smart money habits will be part of their everyday life and not something that will be learned by making mistakes.
We can set an example
As parents we should set examples for our children and help them learn along the way. I remember my parents taught me a basic principle that has stuck with me throughout the years “If you make five dollars, spend three and save two.”
Children need to learn the concept that you shouldn’t spend all the money you have, instead, save the money for something. I have carried this philosophy down to my own children and share these simple principles with my own clients:
- Earn money
- Save 20% of what you earn
- Give 10% of what you earn
- Spend the rest
We can use these principles to show that we should manage our money with a purpose and that money is earned. Whether our children decide to spend it on candy at the store, or wait a month, do more chores around the house and save enough money to buy a nerf gun, their money is something they earned and decided how to spend it.
If we guide our kids through the money saving process, they will start to recognize that if they work hard to earn their money, they should be a little more prudent with how they spend it. .
Instilling Healthy Money Habits
In my opinion, instilling healthy money habits in our children is an important role for parents. Knowledge and habits are things they will carry with them for the rest of their life.
If you can help your children understand the importance of managing their money, and teach them to do so on their own, you are setting them up for success. It’s something that any parent can teach their children, regardless of where they live or how much they make and can make a huge difference in our children’s lives down the road.