The following articles do not deal with kids learning basic Money Skills such as coin identification and counting. Rather, they get you thinking about how you may want to go about helping your kids develop successful money management skills and habits.
4 Strategies to Help Teach Children Smart Money Habits
By Sam X Renick
If advertisers can successfully target children from birth with spending messages, then moms, dads, and teachers can and should be doing the same with saving and smart money management messages.
Where should moms, dads, and teachers begin?
First, start with yourself. Improve your own understanding of personal finance and set a good example for your kids to follow. Nothing will provide better results for children than living your stated values as consistently as you can. Here are some steps you can take to increase your money knowledge:
Second, define the money values you want to communicate to your children and choose language that reflects those values. It amazes me the things people repeatedly say about money, many of them seem to be unconscious. I think you can count on kids to mentally record these messages, in addition to picking up on our behavior. I further believe these messages, verbal and nonverbal, will shape and influence kids thinking and relationship with money. I don’t know about you, but I still have tapes running in my head of things my parents and grandparents shared with us on money and other subjects. As far as I am concerned, one of the best things you can do is to consciously take charge of all your money communication. Interestingly, studies routinely show parents shy away from or defer discussing money with children. This is a gargantuan mistake. Because not only are kids minds like sponges absorbing everything we do or say but, they are being constantly and unrelentingly communicated to by advertisers. Here are a few suggestions to help with defining your money values:
- Read books and magazines on personal finance. Find one that speaks to you. One of my favorites is The Way to Wealth Benjamin Franklin. Other good ones are: Rich Dad, Poor Dad, Robert Kiyosaki; The Millionaire Next Door Dr. Thomas Stanley; The Money Diet, Ginger Applegarth; Dollars and Sense for Kids, Janet Bodnar; and Yes You Can! Raise Financially Aware Kids Jack Jonathan.
- Visit money related websites online like the Motley Fools for example, and
- Join a variety of money related discussion groups or form your own so you can exchange and bounce ideas off of others.
Don’t expect miracles in the short run, although you may experience some yourself as opposed to your children. But as I shared earlier, I believe your voice and values will eventually surface in your child’s life.
- Write down your core money values with your partner or by yourself. I find writing things down helps to clarify my thinking and communication. My parents routinely shared with my siblings and me, “we do not spend more than we make.” This was the inspiration for our song with the same title. My father also regularly encouraged me not to mortgage my future or become a slave to credit card debt. My favorite thing my parents communicated to me was that even though we didn’t have very much money, we could have or get anything we want, if we were willing to work hard to get it. For some reason, I found that very empowering. If you are having trouble with money sayings go online and checkout Ben Franklin. Ben had tons of timeless money sayings like: “Lost time is never found again,” and “Dig your well before you are thirsty.” Ben wrote extensively on frugality. I find the word frugal fascinating, particularly when it comes up in conversation. Although I have no records regarding this, it has always seemed to me people with fewer resources tend to discuss frugalness more negatively than those with resources. Being frugal is prudent. It is wise. It should be talked about with esteem. Check out the book referenced earlier, “The Millionaire Next Door.” It devotes a whole chapter to the subject and found this was a key trait of those with lasting resources.
- Once you have identified and agreed on your core family money values take time to figure out language that appropriately communicates those values. Your language will depend on the age of your children. For example, if you want to encourage kids between ages 3 and 8 to make a habit of saving and investing, instead of saying “pay yourself first,” you might share “saving is a great habit” or something to the same effect. The main point here is to figure out what you believe about money, and make a deliberate effort to communicate and integrate those values into all your communications and behaviors as consistently as you are able to. A couple of my other favorite money sayings for kids are: saving makes me strong, change adds up, from every dollar, save a dime. Also be sure to initiate dialogue about dreams, goals, home ownership, investments, etc. Try to make your communications short, memorable, and easy to repeat.
- Vary the repetition and delivery of your money messages. Challenge yourself to find fun, creative ways to share your money values in addition to verbally repeating them. You might post them on the refrigerator or somewhere in the car. You might turn your message into a song or a rap.
Third, get kids involved. Take advantage of natural opportunities to involve kids in money related discussions. Here are a few:
Fourth, start early and add concepts along the way. As stated earlier, whether we like it or not, kids are being targeted and bombarded with spending messages from birth. What can parents do?
- Shopping, budgeting, list making, coupon cutting, recycling, bill paying, and bank statement reviews.
- Games are another way to encourage interaction. Collect, count and sort coins together. You can create a family savings bank. I still remember sorting and counting coins with my parents on our living room floor.
- Encourage your kids, of all ages, to keep a dream/wealth journal.
- Make sure each of your children has their own savings account.
Education is a process, not an event. So you will need to repeat yourself with frequency and of course introduce additional money concepts, like investing, smart spending, compound interest, credit, etc., as children are ready for more.
- Limit your child’s exposure to television and radio. These are advertising not entertainment devices.
- Expose children to books and music about money early and often. Naturally, I recommend our books and music, It’s a Habit, Sammy Rabbit!, Sammy’s Big Dream! and Mission 1: Celebrate Saving! Additionally, I suggest: Lucky the Golden Goose; Alexander, Who Used to be Rich Last Sunday; Tops and Bottoms; The Giving Tree; and The Trouble with Money. For older kids, I love Chad Foster’s “Financial Literacy for Teens,” and David Bach’s “The Automatic Millionaire.”
- Introduce and associate the concept of saving with money. Kids need to know that money has other purposes besides consumption. You can do this by practicing everything mentioned previously. Saving money has lots of benefits. Just a few are: saving money prepares us for both emergencies and making our dreams come true; saving better positions us to help others as well as ourselves; saving money allows us more choices and freedom; saving money protects and prevents us from poor spending choices; saving money gets our savings to grow and earn interest; saving builds confidence and esteem; and saving is tangible evidence that the future is important.
- Encourage children to have goals. It has been my experience kids with goals and a purpose tend to be more focused in their spending. Share with kids that the same is true with money, every dollar should have a mission and a goal.
In summary, the key strategies to helping children develop money smart habits are: setting a good example for children to follow; communicating consciously and regularly with them chosen money values; involving them in engaging money related activities; and starting their money education early.
About Sam X Renick and It’s a Habit! (IAHC)
Sam X Renick is an award winning children’s author, songwriter, and founder of the It's a Habit! Company Inc. (IAHC), a Los Angeles micro-enterprise dedicated to publishing and teaching financial literacy to young children and their families.
Renick is also the co-creator of the company’s signature character Sammy ‘the get in the habit’ Rabbit!
For the last 8 years, Sam and Sammy have traveled to six countries and 30 states, reading, singing, and sharing skits with over 250,000 children, parents, and teachers encouraging them to make smart money choices and become money smart kids. Their work has earned them a national reputation for developing and delivering dynamic and strategic financial education programs and products and has garnered them numerous awards including the California Jumpstart Coalition Leadership Award for Outstanding Financial Education and the Institute for Financial Literacy Children Book of the Year It's a Habit, Sammy Rabbit!
To learn more about, Sam, Sammy, and the It’s a Habit team visit their website: www.itsahabit.com
What's In It For The Kids
By Lisa Reid
This is excerpted from PurseStrings newsletter, a thrift newsletter for parents who want to spend less and enjoy their families more. PurseStrings is edited by Lisa Reid, author of Raising Kids With Just A Little Cash.
People always ask me if my kids complain about living thriftily. So I thought I would write a little about something that I don't hear discussed much in the conversations of those who are trying to move their families to a thriftier life: what's in it for the kids.
One great parenting technique that many of us have learned to value is letting the child experience the natural consequences of an action. If the child doesn't set the alarm clock, he or she may miss the school bus. Letting kids miss the bus gives them a real-life
consequence and makes a big impression. When he or she neglects to do the thing for which responsibility has been accepted (like set the alarm), it is very tempting to race around and fix it (wake them up anyway). However, this cheats the kid out of an important life lesson that will be needed in adulthood, when neglecting to make
it a priority to set the alarm could cost much more.
So it is with thrift. What do our kids learn when we wear $30 shoes and we pay for them to wear $135 shoes? We love our children and want them to be happy, but we send mixed messages when we protect them from real world decisions about money that
we, as parents, must make all the time in our lives.
Parents are afraid they are going to get grief from their kids if they become thrifty, but I've found that if your explain to your kids why, what it is you are trying to accomplish, then kids not only don't object, they pitch in.
One mom told me this story: she has a 13-year-old son, Tony, who wanted a certain style of Nikes that were $85. She laid out for him the details of their budget, money in and money out. She also told him of the goal she and her husband had set to live on what they
made, pay off their credit cards and have some money in savings for emergencies. She told him, "We want you to have the things that are important to you and we'll help you get them. And we also think you are now ready to help us reach our financial goals for the family." Then she told him she would give him $30 for sneakers and would help him find a way to earn the rest of the money or to find an acceptable pair of sneakers that didn't cost so much.
Not only did Tony not object to this arrangement, he came home the next day and told her that his friend's dad had offered to let them work all day Saturday taking inventory in his store, and Tony had looked in the newspaper and found the Nikes that he wanted on sale
for $65. With the $30 from his mom and the money he earned, he bought his Nikes within a week, and his mom said Tony was extremely proud of himself. She thought he was happy both because he got what he wanted and because he was included in the team
effort to reach the family goal.
Now, this mom was still supportive and caring, but at the same time, she gave her son a chance to learn something that is going to serve him well when he leaves home.
I have found that my kids can easily connect actions with consequences if I point them out. For instance, when we were saving money so that my husband, Jim could quit his job and begin to be a full-time massage therapist, I would say to the kids, "We are going to
be in town doing errands at lunchtime. Let's make a lunch and go to the park to eat it and put the money we saved by not eating out into the 'Dad quits his job' fund.
As money went into the fund, we colored a big arrow in with a red marker. Ivy, who was four at the time, would come home and request that I add a little red mark for the money we saved. She understood that when it was completely filled in, she would also get to see her dad a lot more.
Kids of all ages seem to respond well when they are included in the family "business". They can understand that thrift has some beneficial consequences for them, too. Make it easy on yourself and ask for their help.
Children and Money
Now is the time for a careful look at what our children need to be taught about money. Every generation of parents dreams, works, and saves so that their children experience greater personal prosperity than they. Until the last few years, the steady advances in purchasing power of the average American has made this dream attainable by most.
Nevertheless, financial instruction continues to be neglected in school systems and in most families. Perhaps for the first time in American history, better money attitudes and management skills will be required curriculum for the next generation.
Loving What You Do
Teenage years are the best time to experiment with different jobs before there is pressure to build a stable resume or to provide for yourself. As a teenager, I tried a variety of occupations that were available to me. I shoveled snow, raked leaves, caddied at a golf course, set pins in a bowling alley, and many others. My career at each occupation lasted only a few weeks, because in each case I left to find work I liked better. Finally, at age fifteen, I found a job in a restaurant, washing dishes, taking out the garbage, and sweeping up. I liked it there, primarily because I felt appreciated. By the time I left, upon graduation from high school, I had advanced to short order cook.
Teach your children that there is joy in work. It does not have to be drudgery. Working only for the money is a losing proposition, no matter how much money you receive.
Give An Allowance
An allowance gives your children an opportunity to develop responsibility about money. Parents should set a definite amount to be paid, at a definite time and define the services expected in return. Set a definite schedule for negotiations about increases. Make it clear which items you will continue to provide for your child. This is really no more than any adult would demand from a responsible employer. Pay their allowance promptly and decline requests for advances or loans. Resist the possible temptation to withhold allowance as punishment for things which are unrelated to the allowance agreement.
Teach your children about money by encouraging them to carry it with them, so they can buy the things they want, instead of having to constantly ask you to buy things during your trips to the store.
Selling and Saving
Children are natural salespeople. It seems that during teenage years, when peer pressure and approval assumes undue importance, this natural sales ability is lost. Encourage your children's efforts to earn their own income. Let them know that all income comes from selling, and that mastering the sales process is the most important skill they can gain to aid their future financial independence.
Setting aside a definite percentage of one's income is the one way to buy something that happens to cost more than the amount of money you receive at one time. Once your children have a basic understanding of mathematics, they can understand this principle. It is not rocket science to figure out that if you continually spend 100% of your income, then you'll never get rich. Understanding is not enough, because practice is required. Show your children that learning to save is the way to be able to afford anything they want. Most banks have substantially increased minimum balance requirements on savings accounts. Although saving is more important than ever, getting started is harder than ever. For this reason, it may be advisable for you to be the custodian of your children's savings account(s) until they accumulate enough to open their own account at the bank.
Another important point about saving is that money is worthless until you spend it. Thus the purpose of saving is not just to accumulate a big bank balance, but rather to have the freedom to buy what you want. Teach them this principle by suggesting they choose an item they want and then encourage them to save for it, and then buy it once the purchase price has been saved.
The Value of Money
The average American watches TV 1,550 hours per year, listens to the radio 1,160 hours per year and sees almost 40,000 advertisements. The sponsors of these ads want us to believe that spending money on what they are offering will solve problems and improve our lives.
Money is only good for buying things. It can never take the place of good health, satisfying work and relationships. Teach your children that there are things more valuable than money. Teach them to value people based on criteria other than their wealth.
Although this may be a source of frustration, it is likely that your children have different values than you; thus they will want to buy different things than you. Since they will be dealing with small amounts, any mistakes they make cannot be very costly. Mistakes are a fine way to learn, so long as they don't cost too much.
It is doubtful that you can rely on the educational system to teach your children effective money making and management skills. Teaching and/or helping your children understand the financial skills they need to handle money may be just as valuable as a fine education.
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