Teach The Children

For many families, talking about money is taboo. The adults make it, the kids ask for it, end of story. Yet financial experts agree that understanding cash, credit, and consumerism is possible, and important, for building a sense of financial responsibility in children. How can you teach your kids about money? What kind of message should you teach them? Let's talk about money.

Kids need to know how the economy works. No, not stocks, interest rates, and world markets! I mean the basic ins and outs of a family economy. You can start when your kids are very young by helping them understand the difference between needs and wants, that money comes from working, what money looks like, and that everybody has a job (a kid's job is to learn things, to play, and to participate in the family). As they get older (once they know that a nickel is worth less than a dime, even though it's larger), you can talk with them about credit cards, bank interest, and so on. Kids can learn about budgeting from the time they are about seven.

Remember that a solid money education is one of the best tools you can give your kids—it will aid them the rest of their lives.

We are teaching my step-son about money using Dave Ramsey’s “Financial Peace Jr.” The system teaches them how to earn, give, save, and spend money. They list their chores on a commission worksheet. He does jobs around the house every week and then we pay him a certain amount of money, depending on how much work he finishes. This money is called commissions.

Financial Peace Jr. teaches how to save money; pay cash for purchases and how to earn money for the things you need or want. Many adults have never learned this lesson so they borrow money when they want something instead of saving for it.

The commission that he earns is managed using three envelopes. The first is Giving. He puts at least 10 percent of his commission in this envelope. This money is given as offering at church. The next envelope is the Savings envelope. He also puts a minimum of 10 percent of his commission in this envelope even when he is not saving for anything in particular. The third envelope is the Spending envelope. This is for the rest of the commission after putting money in the Giving and Saving envelopes. This is money he can spend with parental guidance, of course.

In closing, one important thing to remember is that your actions and words about money should be consistent. If you say one thing but do another, your child will see through this hypocrisy very quickly. On the other hand, consistency will reinforce all your efforts; what you say will support what you do, and vice versa.


Peace & Blessings
Sharon

I will have more for you on Monday, October 4th! Until then keep working your plan for financial peace and freedom.


Wednesday's Blog: Jennifer, "Working Single Moms"