What are we teaching our kids (and ourselves) about money?
Sometimes people get stuck on the way to their dreams simply because they’re lacking knowledge, and then get overwhelmed by all the information that’s available. Being the cyclone for learning that I am, I thought it might be helpful to share my favorites from my digging in the realm of personal finance.
FOR TEACHING KIDS:
I’m really excited about a book I read earlier this year. One of the things I wish I’d received as a child was a more thorough financial education. As most parents do, I wanted to fill that gap for my own children. I’ve spent a lot of time researching different methods and programs out there for teaching financial literacy to kids and this is by far my favorite!
It’s called Raising Financially Confident Kids by Mary Hunt. Now anyone who’s spent much time with me and my kids knows that I have very few rules. When my children were younger I had slightly stricter guidelines, for safety purposes, but as they age and are able to reason more, I loosen the ties further and further. I believe wholeheartedly in educating children and allowing them to try things out in the world and gradually learn how to self-motivate and self-regulate, as well as manage time and resources.
For example, I’ve never censored language in our house. The kids can listen to explicit language, and use it if they choose. However, I explained to them what all the words mean and why many people don’t use them and what others might think of them if they use “bad” words. So far, my kids have chosen not to curse and admonish me when I let the occasional expletive fly.
So I was looking for a financial education program that would mirror my values in that way — I found it in this book. The short summary is that kids are given a salary starting at age 10. This salary is the money that would be spent on the child anyway. Maybe they get candy at the grocery store, or a toy now and then; or maybe they like clothes that are fancier than what the standard clothing budget allows. This money goes into the child’s salary.
As the child ages, more money is added to the salary, but they must also cover more expenses; like all their clothing, school supplies, music lessons, club dues, and money to go out with their friends. Eventually, they’re responsible for paying for everything except room and board. There are some exceptions, such as a summer camp that they're not interested in, but the parent would like them to attend.
There’s so much more in this book about how to set up this system, creating contracts with the kids and all of the conversations leading up to and preparing them for taking on financial responsibility. There are things in here that I think would help many adults too!
COVER ALL THE BASICS:
I like the Infographic Guide to Personal Finance book because it’s like the executive summary of all the personal finance books out there and it’s got great, easy to understand visuals.
All Your Worth by Elizabeth Warren and her daughter, Amelia Warren Tyagi is an argument against being penny-wise and pound foolish. They take on the big picture view and help their readers work through how to adjust their spending so they have the appropriate amounts set aside for needs, wants, and savings.
The Millionaire Teacher is written by Andrew Hallam, it’s clear that he loves investing and packages what he knows into an easy to digest guide. His advice is simple, effective and easy to maintain.