As parents, we worry about giving our kids a good education. That education should include teaching them how to manage money.
Your goal isn’t to make them rich or encourage them to worship money and possessions.
No, the goal is keep them from screwing up their lives by mishandling money. I’m talking about getting buried in debt, having cars repossessed, houses foreclosed on, and marriages falling apart because of financial pressures.
These scenarios play out every day, and you can help prevent your kid from becoming a financial fool as an adult.
How? Start early. Give your children an allowance, and require them to save a portion of it. Open a bank account for them. Teach them to save for items they want. If children learns to delay gratification now, they’ll remember the lesson as an adult.
I opened a bank account for my 11-year-old son, Connor, and he thought it was cool. Occasionally, we walk into the bank lobby, and he deposits or withdraws some cash. He feels like a big man. He has to talk to the teller and state his business. Not only does Connor learn about money, he learns about interacting with people.
Of course, we’ve already had some fights about money. Connor has wanted to borrow against his allowance a few times to buy things. No way. Think about it. Borrowing from me is like an adult making a credit card purchase. You’re spending money you don’t have – and vowing to catch up later.
I don’t want Connor to get on the financial treadmill now and, as an adult, have to run faster and faster to get out of debt.
Your financial mistakes can help your kids
I’m not the smartest guy about money. You probably aren’t either. I’ve made some dumb financial decisions. But my mistakes make me more aware of the lessons to teach my son.
When your kids are young, simply focus on teaching them to save. As they grow older, you can introduce them to investments, such as stocks. Again, your job isn’t to make your children financial geniuses. It’s to teach them there are good ways and bad ways to handle money. And the decisions they make will influence their quality of life and peace of mind.
For too many parents, money is like sex – a topic we’d rather not discuss with our kids. That’s dumb and irresponsible. The earlier you introduce the subject of money (like sex), the less awkward it will be for both of you.
“Once they learn how money works, children often display an instinctive conservatism,” according to an article on CNN.com. “Once they learn they can buy things they want with money – e.g., candy, toys – many children will begin hoarding every nickel they can get their hands on.”
So your job may not be as hard as you think.
Don’t sentence your child to a lifetime of financial illiteracy. If you need help, check the web. Talk to your banker or investment advisor. These days, there are scores of resources for parents to teach kids about money.
Take advantage of them – before it’s too late.
You wouldn’t deny your children a vaccination that could prevent future illness. Nor should you deny them instruction that could prevent future financial misery.