Hey everyone and thank you for joining me today for this week’s Friday Finance with Josh! If you are an avid reader of this blog, chances are, you are a mom that likes to save money. If not, you’re probably a dad that thinks moms that save money rock! Either way, today, we I’m going to give my opinion on what I feel is the most serious topic in personal finance today! When and how to teach your children about money and frugality! Although, we have all made our own mistakes financially and otherwise, it is on us to teach our children to avoid doing the same. It’s a harsh reality however, there are few middle and high schools teaching children about managing finances. Because many parents don’t know how to teach their children, they decide not to all together. Now, allowing their children to make the same mistakes as they have.
All of that being said, before I give you my ideas, I want to make sure that it is very clear that these tips are my own opinion. I am in no way telling you how to raise your children. I’m simply hoping to open your mind to creating a plan for when and how you will teach your children about money and frugality.
When And How I Plan To Talk To My Children About Money And Savings
Recent studies have have shown that children seem to grasp the concept of money at a much younger age than we thought. Children handing money to the cashier at 4 years old generally understand what the money is and what it is used for. Now, as far as savings, interest rates, debts, ect… this is much too young but, I will start by letting my children pay every time I go to the store from 3 years old until they don’t want to do it anymore! This will instill the quid-pro-quo concept that money was designed around.
When it comes to saving money, I would guess that by 7 years old children would get a good grasp of savings if it was taught properly. The reason I chose this age is, this is the age that most children graduate 1st grade. The grade where they learn math basics like 2 plus 2 and towards the end of the year 2,000 plus 2,000. So at this point, your baby will know what money is and that if 2 plus 2 equals 4, $2.00 plus $2.00 equals $4,00! Â My plan is, as a graduation gift for first grade, I’m going to start a savings account with $200.00 for my children. That day, I will give them the option to take $100.00 cash now and put $100.00 in savings or to put the entire $200.00 into the savings account. No matter what they choose, there are positive and negative factors associated with the decision. This is when I plan to start teaching them these factors starting with a simple conversation about their decision.
When it comes to debt and actual money management, your children won’t have to technically do anything until they are 18. However, I feel that it’s best to start teaching around 15. At this point, my little baby will be close to all grown up. My lessons earlier in life have taught them about money, savings, interest, ect… Now, it’s up to me to teach them how to balance and manage a budget and checkbook. So, I’ll start a joint checking account and deposit their allowance. It will be up to them to transfer some to savings, write checks, use their check cards and manage their balances. Of course, I plan to check every night for overdrafts and when those times come, as they will, I will have a man to man or man to woman talk with my kids about the down sides of bad money management.
Around this age, I’ll also be teaching my children about frugality. Money goes a long way with coupons and smart shopping. So, I will find an exciting way to teach them about coupons, side jobs, ect… The truth is, I haven’t personally thought of a way to do this yet so, this one is up to you!!!
Final Thoughts
Our children are our future. The will be the paramedics that save our lives, the presidents that guide us and the police and military forces that protect us. Lets allow them to focus on growth without making the same financial mistakes that we did!
About The Author – Joshua Rodriguez
Hey everyone, I’m Joshua Rodriguez, the proud owner and founder of CNA Finance. I hope you’ve enjoyed my article and that it has inspired you to draw up a plan for teaching your children about personal finances. I’d love to connect with you about this topic or any other personal finance topic of your choice. Let me know your thoughts in a comment below or get in touch on Google+!