It’s important to teach your kids how to handle money.
Our society is overly focused on the accumulation of wealth. We’ve all seen people live in homes they can’t afford, drive cars they shouldn’t be driving and buy designer clothing, all in the name of trying to impress other people.
Kids need to learn the value of a dollar and how to manage their money. I’m not always going to be able to micromanage my kids spending, nor do I want to. I want them to see how hard people work to make money and the importance of saving. They need to live within their means and appreciate that money doesn’t define a person. Most importantly, I want them to understand it’s a persons character that matters, not the size of their bank account.
In my previous life, I was a Financial Advisor at a large bank. In the twenty years I did this, I saw families handle money differently. Some did it well, some didn’t.
Teaching kids about the value money can be especially challenging.
My kids recently went back to school and wanted new clothes. A girls got to look her best and that means having cute new outfits to wear to school. This can get expensive.
Since our daughters are getting older, ages 17 and 14, we decided to try something new. We put an amount we determined would be appropriate on each of their debit cards, and let them decide what they would buy.
“This is money for you to buy whatever you want with it,” I explained, “But it’s the only money you’re getting. Use it wisely.”
“If we don’t spend it all, can we keep it?” My daughters asked. They were intrigued.
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“Yes,” I said, “It’s your money. You get to decide what to do with it and if you don’t spend it all, you can save it for later. Don’t waste it.”
We wanted to see how our daughters handled their money and what they bought. We wanted to watch them make choices and decide what to buy.
A funny thing happened.
They thought twice about buying something. They bought less than they would have if I had been paying for the items and they both had money left over. Money they wanted to save for “later in the season when new clothes come out.”
It was an interesting experiment and taught me something that I always knew: Kids think twice about spending their own money.
Both my daughters agreed that since they were able to keep whatever they didn’t spend, they only bought items they loved. What a novel idea, right? Shouldn’t everyone only buy items they truly love? They passed on items they liked but didn’t love and admitted they wouldn’t have thought twice about making those purchases if I had been using my money.
This was an interesting experiment and one that proved beneficial.
Some lessons are too valuable not to teach. You don’t want to wait until your kids move out of your house or go to college before teaching them how to handle their own money. Start now. Understand they’ll make some mistakes and use these as opportunities to have great discussions.
It’s important for everyone to understand how to manage their finances, spend money wisely and have a clear picture of the value of a dollar.
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Want to read more? Here’s a recent Huffington Post article I wrote: School Is Starting, A Letter To My Kids.