I’m trying to raise my kids to be Money Kids.
So what exactly do I mean by Money Kids?
These are kids that have knowledge of the dangers of credit cards, the monetary value of things, what an interest rate is and how it’s used, and how to saving money to become financially independent some day. I’ve already identified my plan to give my kids a head start, but this is just “priming the pump” for their future finances!
The Monetary value of things is tricky to determine because people value things differently. For example, a hammer is a hammer and you buy the cheapest one that will do the job, unless you are a carpenter…. if you are one, then you buy an Estwing. I don’t need a Estwing though, why should I spend more for something that I would rarely use?
I get resistance from people who say I shouldn’t do that, and it will hurt them because they’ll never learn to work hard for money. They go on to say that back when they were kids, they never got that advantage and neither should today’s kids.
But I say, my kid won’t have a Pension… And I sincerely doubt that “company loyalty” will even be in the next generation’s vernacular! And Outsourcing is no long a far distant theory, it’s now a reality. How can we compete with a foreign workers that get paid a similar amount that we have to pay for an hour at a minimum wage rate? I think it’s kind of silly to wonder why Americans are unemployed… to me it’s pretty obvious that all the jobs are more or less being shipped overseas.
So what can I do as a parent that will give my kids an advantage in life, so they can at least live at least a minimal middle class existence?
- Give them an allowance, with a portion dedicated to savings as a learning tool.
- Create a saving account for them.
- Invest money for them into a brokerage account (UTMA).
- Teach them to be frugal.
- Convince them to save their earnings into mutual funds, ETFs, Bonds, Stocks and Cash.
- Teach them about Portfolio Diversification and the principle of rebalancing that portfolio
So I’m going to teach these money principles to my kids, creating my own Money Kids that will be prepared for the financial future someday!!!
I think kids today (and tomorrow) are at a huge disadvantage, especially with the trillions of debt that they will have to handle someday in the future.
Do you think kids today have a deal with a stacked deck of card that are against them? What is your plans (if any) to help your kids in the future?
-MR
Congratulations for making this courageous article. A lot of people I know in France think money is “tabou” and teachers, who are mainly socialists there, think that if you do a hard job you will get enough for making a living. Wrong ! Nobody will pay the pension for our children. In a global economy competition will be become tougher every day. Already China is facing increased labor costs and move manufacturing plants to other Asian countries like Vietnam.
Our kids need to understand that “cash is king” and getting financial education starting should start in primary school .
I think kids today may have it harder than I did when I graduated college, just because the number of jobs seem to be shrinking here in the US. However, I hope it makes people willing to work harder to do better in school and try to rise above the competition, instead of just giving up. I have 2 kids in high school now and I see so many kids just wasting opportunity. Some are indulged by their parents and I think they believe their parent’s connections will take care of their employment.
I truly believe kids need to struggle somewhat to understand hard work. They need to have a vested interest in their education. I don’t know, I am certainly concerned for what the future holds for my kids. All I can do is prepare them the best I can and the rest is up to them.
I love money and talking about money and investments and growth. Once our kid is older and/or starts getting gimmies, we’ll start an allowance. We’re not there yet. It’s a little difficult teaching about money these days because we use so little cash… so far all he knows is that you can exchange a quarter for a honey stick at the farmer’s market.
I agree with Everyday Tips! More parents needs to teach their kids the value of hard work. Hard work doesn’t always equal success but parents are starting to teach that to the extreme. A lot of kids are starting to think that hard work is for suckers and they can’t figure out why they just got fired.
Also… I work with a lot of teens and recent grads. It is important to give your kids a good financial standing. However, not trying to offend anyone, but I have to say that parents are the biggest roadblock to their kids success.
The good news is that America’s teens are this AMAZING combination of hopes and dreams and energy and passion. The bad news is that the grown up’s doom and gloom is raining down (hard) on their parade and a lot of them are starting to adopt the “What’s the use in trying, we’re all f’ed anyway!” attitude.
So many teens are so scared they don’t even try. It’s very sad.
@Anne Egros
I agree, I just recently seen a hat at Walmart that was made in Vietnam.
I hope I’m being pessimistic in my thought with this post, but it never hurts to do a little extra preparation!
While I’m teaching my kids about money, they don’t know that I’m trying to save money for them too. Hopefully that will be a surprise when they are 21…
@Everyday Tips
Based on what I read of you, I’m positive your kids will do excellent!
I know what you mean by kids today… I blame it on the media (TV, etc), they learn that everything is a joke and to just chill. My kids are active in sports, and other activities… Hopefully, I’ll be able to do them right and teach them well. I admit I’m a nervous parent that questions what I do all the time, but so far my kids seem great 🙂
@Jin6655321
Ironically, my son already thinks he know what he is going to do when he gets older (a fireman). He has had this dream ever since he was a small boy… For him, I’m trying to give him a boost up, because I’m afraid that unless he’s in the big city, fire fighting will not get him ahead financially in a small city.
But I could be wrong, I’m just going by hearsay… Either way, teaching him to be financial astute, is a win-win!
I think the opportunities are there for kids willing to work for it. A quick job search in my area turns up hundreds of open positions, but you have to be a step above the hundreds of applicants to get the job. I think the real difference between today and 30 years ago is that there is very little padding when you miss an opportunity now…
@Nicole
I start an allowance for me kids at age 5. So far they are exceeding my expectations with respect on how they manage their money.
I try to teach them everything about money, like how I go to work for money, water, electricity, and heat cost money, food cost money, etc. Surprisingly, they have picked this up and are mindful not to waste it.
I was incredible proud of my son yesterday! We heard the water to the shower go on for a few minutes, then off suddenly… The a few minutes later it went back on and off again in a few more minutes, then he was out.
Of course, we asked if he showered well, and he said yes. He went on to explain that he remembered that article about a “Navy Shower” on my website “MoneyReasons.com” (I showed him it earlier in the week), and was trying that technique to save water…
He likes to save money and tries to be green at the same time. The being green is what he learned from School (hurray!).
@Budgeting in the Fun Stuff
I agree, and I hope it will still be the same way when my son and daughter enters the work force when he is a teenager (he’s currently 10, she’s 6). But so far, it seem like the trend it for jobs to go overseas instead of stay at home.
Perhaps, I’m just being too apprehensive about it, but a little insurance via preparing my kids goes a long way towards me feeling less stressed about it 🙂
My son just turned 5. Maybe I should give him an allowance to spend when we’re grocery shopping or yard saling. I always forget to have him bring money from his bank when he does those activities with me.
He did understand the difference between the $30 water gun instead of the $3 one. I told him he could get 10 smaller ones for the price of the big one and easily understood why we got the smaller one.
I often think about how I can help my kids financially without having them turn into lazy bums with a sense of entitlement to my money. I’m not sure I figured it out yet. I’ll let you know in 13 years.
@Sandy L
I must be doing something right, my son is pretty frugal. Last year, I asked him if he wanted the new Nintendo DSi, and he told me now, he said the DS is just find for him and he doesn’t need to get one now…
I think I taught him well, at least with respect to frugality. 🙂
I don’t have kids (yet.) However, last semester I taught a 3rd grade class the concept of money. It’s actually a standard in our district. It was a great learning experience. We brain-stormed what they knew about money (that was really interesting!). They said things like, “You pay money for your money.” or “You have to pay Chase.”
I incorporated earning money and spending money into my classroom behavior management where they earned money for certain behaviors and had to pay for other behaviors. They also learned the concept of debt and not having enough money to purchase something out of the treasure box. I also instituted a “savings” account. The kids could “save” their money in an envelope that I held onto, like a bank, then spend their saved up money towards a larger item. Out of 19 kids, only about 7 of them “saved” their money. Too many of them needed instant gratification!
@Little House
It’s good to see the school jump in and become active with finances. This year (my son’s a 5th grader), they are simulating some sort of financial model for the students. I’m not sure of the exact details, but I do know that my son said he needed to get something done before tomorrow to earn $50.
I’ll still teach what I know to my kids too of course; but it’s nice to know the teachers are teaching them about finances too 🙂
My kid and I had a big conversation on the way home from daycare about how people work at jobs in order to get money to buy goods and services. It started with him asking where Daddy was… he’s teaching. Why? That’s his job. Why does he have a job? Because people work at jobs in order to get money. Because you use money to buy goods and services. etc. etc. etc. Then when he got home he asked about the advertisements in the mail… so we would buy things… with the money…that we earn… because that’s their jobs… It’s amazing the kind of conversations one can get in with a preschooler. Though a lot of times talking to him I’m wishing I knew more materials science… ‘cuz I can’t answer a lot of those whys.
MR– I LOVE the navy shower story. Your kids are turning out really great!
@Nicole
Thanks, I’m very happy with the way my kids think and act. I’m doing the best that I can, I hope it’s enough for them, they deserve the best!
It’s hard to teach kids when they are preschoolers, especially money issues! At that age I would say stuff like you mention above, but I knew they would forget (or at least me son did). Part of learning is repetition (or so I’ve been told), so I don’t get upset when they forget the complex money lessons… Eventually they pick it up 🙂
I’m hoping not only our kids will be independent, but also take care of parents forever! 🙂
@Financial Samurai
This is one area that I’m a bit backwards.
In many ways, I’d rather my kids not see me when I’m very old. I like the idea of them remembering me while I’m still fast and strong…
Hopefully, I’ll have saved enough money that I can take care of me and my wife without being a burden on them.
I also hope that I keep my wit about me, so when they do decide to visit, I can still talk intelligently to them.
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