This week’s blog in our Financial Planter series is written by Megan Poore, Guest Blogger, who is a Personal Finance Expert*
Take a moment to think back to your childhood. Can you remember your first real lesson about money? Did it involve sorting fake dollar bills and putting them into a plastic cash register? Or checking to-do items off a chore list and getting compensated in nickels and dimes? Your lesson may even go back to visits from the Tooth Fairy, or the first time you were responsible for filling your car with gas when you turned sixteen.
Regardless of the timestamp in your own life, this exercise serves as a reminder that teaching your children the value of a dollar should be an ongoing conversation. Introducing thoughtful, meaningful, and memorable lessons at a young age, and building on those until your kids move out of the house (for the first time, really fending for themselves), is easier said than done.
Keep these tips in mind as you weave financial wisdom into your children’s everyday lives.
Kids and Money
I think you can agree that, regardless of a child’s age, money is a motivator. Fortunately, the younger you start teaching children about money, the simpler their motivations. The best real-life opportunities for memorable money lessons happen in an already fun or exciting situation. I’ve offered this example in an article about budgeting: While on vacation, give your children small allowances and make them responsible for choosing and paying for meaningful souvenirs. This is a simple but easy way to introduce budgeting to children as young as five years old. They will feel pride in having a keepsake that they hand-picked to commemorate their trip, and hopefully they will gain valuable insight about making disciplined choices along the way.
Middle School & Money
The late preteen and early teenage years often give your children their first opportunity to earn money by doing jobs that don’t require your constant supervision. Babysitting, dog walking, and leaf raking are a few ways your middle-schoolers can transform into budding entrepreneurs. Although you’ve already been teaching your children about saving and spending, this may be the first time these rules will apply to money that they worked hard to earn. In your own life, you may treat money that you earn differently than money you are gifted, and those spending and saving behaviors are learned at a young age. Help your children develop a system for deciding how much of their money they will use for spending, and how much they will save for more expensive items down the road (like those tablets they’ve had their eyes on). You may have heard of the 50-30-20 Budget Rule: Fifty percent of your paycheck goes toward your needs, thirty percent toward your wants, and 20% is set aside for savings. This rule is likely a bit complicated for applying to weekend babysitting cash; however, establishing a savings guideline based on percentages earned is a good way to support positive saving behavior in your children (and it’s a great math lesson, too!).
Teens & Money
First cars and first “real” jobs present you with great opportunities to teach lessons about the responsibilities associated with larger sums of money. By the time they’re teenagers, your children may have their own checking and savings accounts, and they probably have ways to check the balances in each account. If so, they are facing the temptation of making irresponsible financial decisions. For you, this is often the hardest stage of teaching financial responsibility. Your desire is to swoop in and help when your children falter – to spare them the discomfort of a difficult lesson you probably learned the hard way. Have you ever looked at your statement and realized that you’ve spent far more on groceries that month than you had planned? That’s relatable for most people – and spending more than you intended is an easy mistake to make. It’s okay to let your children make the same error, especially when they are still in a controlled environment under your supervision. Remember, there is a significant amount of self-confidence that comes from problem-solving, so be sure to let your children make mistakes.
When you’re a parent, as much as you want to hold an ongoing conversation about finances, the goal is not to make money the only motivator. You want your children to grow into financially-savvy young adults – but you don’t want their childhood to be remembered as an ongoing lecture series. Always keep it fun. And don’t rob your kids of the experience of figuring out some of the more difficult parts themselves!
*All content provided in this blog is supplied by Megan Poore and is for informational purposes only. Barclaycard makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
Megan Poore is a financial advisor at Lucien, Stirling and Gray Advisory Group, Inc. in Austin, Texas. Despite declaring that she was “never, ever going to save any money” at age five, Megan’s oldest daughter is currently 12 and estimates she has enough money to pay rent on an apartment for at least two months. Megan helps both women and men take control and navigate changes in income, retirement assets, business ownership and other matters related to major transitions, and their effects on a client’s lifestyle and family responsibilities.