However you slice it, the schooling situation right now is tough.
If you are vehemently in favor of returning to full-on school … well, compassion would dictate that you would recognize that others are having more difficulty with that, for caution’s sake or for whatever other reason.
And if you are vehemently in favor of keeping children out of school … well, compassion similarly dictates that this is not a simple matter for many families, and people would have serious difficulty changing their entire lifestyle around this new reality.
Seems like we need more compassion all around, and less arguing and bullying, right?
One thing we can all potentially agree on is the importance of providing solid financial education to our children. We are living in a very complex financial world and kids need to understand how money works (and doesn’t work).
Here below are some financial education tips that we’ve found extremely helpful for teaching children about how to handle financial matters.
Even if you don’t have kids yourself, you can impact the next generation, for the positive!
Guiding Principles For Raising Money Smart Children
“One thorn of experience is worth a whole wilderness of warning.” – James Russell Lowell
Rather than seeing these ideas as “rules,” it might be helpful to think of them as principles when it comes to helping your kids see money rightly.
After seeing many families do this well, these are some of the best things you can do with your children when it comes to financial education.
1. Talk openly about money.
Parents make a mistake when they keep information from their children. The only way children learn what is a good deal and what is too expensive is by the experience of what their family earns and what items cost. Hiding this information robs children of the financial education they need.
2. Talk factually about money.
Many parents have strong emotions about money based on their childhood experiences. Whether we know it or not, these emotions are always transmitted to children; they “pick up” our feelings with amazing acuity, especially unspoken and powerful emotions such as fear. Letting emotion drive the situation can cripple children from growing up to make sound financial decisions. Using facts to discuss money is a big plus for kids.
3. Require chores; pay for optional work.
Call us old-fashioned but everyone in the family has to help complete the work that needs to be done. If you want to pay your children, only pay them for optional work they can choose to do or not to do.
4. Provide children an allowance that allows them to make real choices.
Talking about money is important, but children need real-world lab experience to understand the consequences of their decisions. Consider giving them an allowance large enough so that they can purchase some of their own needs. Then continue to give them honest advice, and help them ask the right questions to make wise decisions based on their values.
5. Help children comparison-shop.
Help them consider issues such as cost, quality, and convenience. Every choice in life involves trade-offs, right?
6. Require children to wait before making large purchases.
Avoiding impulse purchases is one of the biggest money skills we all need to survive financially in today’s economy. Here is a good rule of thumb: Children should be required to wait as many days as they are old in years before being allowed to make a large purchase (over a week’s allowance). There is always tomorrow, and over half the time they won’t remember what attracted them to the desired item in the first place. Developing this habit will help make them resistant to impulse buying.
7. Don’t use money as a punishment.
Your priority should be helping to give your values to your children, not buying their outward behavior.
8. Don’t loan your children money!
If their desired purchase is something they should be saving for, let them save for it. If you want to buy it for them for the value of the experience, buy it for them. The principles are, “If they want it, they have to save for it. If you want them to have it, you will buy it for them.” Loaning your children money for items they want teaches them they aren’t responsible and don’t have to prioritize.
Oh and last but not least, teach your kids about taxes! One thing you’ll NEVER hear a wealthy person say is “I don’t know anything about taxes.” In working with clients who bring their kids to the office, it’s always fun to get questions from some of these young ones about what we’re doing on the computer. 🙂
Some may disagree with all of this advice– we don’t intend to become “parenting gurus” in our spare time — but we do hope that, at minimum, this will help you be thinking about how your financial values get passed down to the next generation.
We’re in your corner and we appreciate YOU!
Pronto Income Tax Team