Written by: Joseph Francis
Today I am going to end the 12 Ways to Teach Your Children About Money with the last 7 keys. Let’s nip this in the bud right away folks.
1) Don’t reward impulse
Hearing a kid whine at the store about not getting what they want is always funny. It would have been hard for me to whine with a fat lip if I tried that as a kid. We all want things, and we all want them right now. The world is designed to cater to our impulses. Sadly, this also coincides with debt and living a less than quality life. When your child is being incredulous, never back down. People need to know that they can’t always get their way. In fact, in life, we rarely get our way. This point might be the most important one of all them.
2) Promote volunteerism and giving
Despite all the bad things that occur in this part of the world, we are still very lucky to have been born here or just to live here. People dodge bombs and swim across oceans to get here for a chance at what we have. Knowing this at a young age is vital and there is no better way to help children to understand how lucky they are than by helping those less fortunate. There are many people in our community that need our help. Whether it is at the local shelter, your church, the community center, or at summer camp. Young volunteers breed adult leaders. Adult leaders almost always become financially free.
3) Stress humility
Being humble is an extremely important trait. How this ties into money is very apparent to me. While we all need certain things in life, we don’t need the best of everything. Humility will allow your child to understand that everything is not a bragging contest. Being content with what you have is very important. Helping those less fortunate ties right into this one. So does the opportunity cost point. Having the best car or the biggest house or the newest clothes will not make you better than anyone else. Working hard, helping others and practicing patience are the keys to success. Taking your child down a peg might be the best thing you can do for their future.
4) Get them a bank account
I think every child should have a bank account. You will have to start by opening one for them, but make sure that they understand how it works. At its core, your financial plan is always based on how you handle your day-to-day banking. Keeping a balanced budget, staying in the positive, and not falling into debt is crucial. Your checking account is ground zero for this and children should know this at an early age. It will also get them familiar with the bank itself, which for many people is a source of pain. Understanding that like money, the bank can harm or help you is important. Show the perils of some of what the bank offers but also how you can use them to your advantage.
5) Vilify debt
There is nothing in my mind holding back the middle and lower classes of our society more than debt. It ruins families, destroys marriages and keeps the masses impoverished. The system of debt is always trying to find new ways to part you from your money. Children need to understand how powerful debt is and they need to grow up hating it. While you might think that is a lot to throw on a child, I disagree. We teach children about hot stoves and the railroad tracks, yet debt ruins far more lives than those. While you teach your child about interest being their friend, also explain how reverse compound interest can hurt them. This can be done by getting them a prized gift, but withholding allowance to get it. Show them that wanting it now will cost them more than the item is actually worth. In fact, make it painful so they really get the point. $100 toy will cost $200 of future allowances. Those empty weeks will hurt as the fun of the toy has surely worn off.
6) Save for school and understand student debt
We have an epidemic of student debt in this part of the world. It is scary that the generation that will encompass what is to be the middle class is starting their lives in a massive hole. Instill a vigilance of savings towards education in your child as soon as they hit high school. If at all possible, make them starkly opposed to getting a student loan. This can be done with summer jobs and part-time work during the school year. When they are children, used a tax-deferred education savings vehicle to save for them. Also, make them understand that this savings is not free. They must work hard themselves and of course maintain good grades. I see a drastic difference between my younger clients who have student debt and the ones who don’t. The stress it puts on young adults is immense. Teens should know that this system is rigged against them and it is up to them to navigate through it.
7) Work them hard
While my parents weren’t perfect, they were pretty damn good. One major life lesson they taught me was that if I wanted anything in life, I had to work for it. I had a part-time job since the age of 13. Pouring coffee at a local shop wasn’t fun but it showed me what getting a paycheck was really like. Since then, I have always had at least one job and often several. It is literally all I know, and your kids should be the same. Hard work will teach them about sacrifice, patience, and cooperation. There is absolutely no reason why everyone shouldn’t be working from the age of 15. This ethos will propel them to great success in life, but even more important, not doing so will condemn them to a life of mediocrity. Lazy kids make lazy adults and lazy adults always live in a world of scarcity. This may be the best gift you ever give your child.
“It is easier to build strong children than to repair broken men.” – Frederick Douglass