One popular question that I get asked is, “what is the best way to you teach your children about money?” This is definitely a topic I am very interested in and want to do well with my own boys. (Isn’t it interesting how our children can motivate us to do things that we otherwise may not do for ourselves?)
Today’s article and the next two are sharing information from a book I recommend called, Make Your Kid a Money Genius (Even if You’re Not) by Beth Kobliner. It is a pretty easy read and full of lots of good information. She goes into detail for some topics and also makes you laugh.
I love how this book broke the advice into six age groups: Preschool, Elementary School, Middle School, High School, College and Young Adulthood so you could just read the section that applies to your world right now. She says, and I totally agree, that there are only a few concepts that truly matter in the financial world. The issue is that there are billions of dollars and whole industries working to get you to ignore these concepts, play on your psychology and get you to spend your money in ways that may not be in your best long term interest.
The first chapter of the book is called, “14 Rules for Talking to your Kids About Money.” Kobliner recommends starting to talk to your children about money earlier than you may think you should. A report out of England’s University of Cambridge concluded that by age 7, many of the habits that will help kids manage their money are already set. Yikes. My boys are already 5 and 7. Is it too late? This book says no, but realize you don’t have to wait for a certain age to start talking about money.
A key piece of advice and part of the reason she divides each section into the six age categories is to keep your discussion and lessons age appropriate. Remember who you are talking to. You do not need to overshare certain details. She even gives you a list of things you should not share (your salary, how much you pay a tutor or babysitter, how much money you have in your various accounts, what you spend on a gift, how much you worry about paying for college, and which parent makes more money).
The key concepts are all ones I agree with. The chapters in the book are:
- 4 Rules for Talking to Your Kids About Money
- Save More
- Hard Work Pays
- Drop Debt
- Better, Smarter Spending
- Get Insured
- The Plain Truth About Investing
- Give Back
- Your Kid’s Most Important Financial Decision: College
- Financial Advice for You, the Parent
The author goes into A LOT of detail on getting money and how to pay for college and preparing to send your child to college, both as the parent and what to teach your children. If you have a child in high school I highly recommend this book for that information. You can just read the sections on college funding. I thought it was a valuable and worthwhile read.
As with most books, there is too much to put in a few articles which is why it is a book. 😉 However, I’ll give you some of my key takeaways.
One theme of this book is to talk, really talk about money and make a conscious effort to do so with your children. Talk about what you do and how you do it with regards to your finances. Integrate the money lessons into your day to day life. No one enjoys lectures. Try to teach and explain at applicable times. Use your own history and real stories. Try to use real numbers when possible. Especially in these modern times, so much of dealing with money is done electronically so it is difficult for children to understand the reality of it.
Children are sponges and pick up and learn more than you realize by watching what you do and sensing your emotions about money. You need to be careful of what you are showing and teaching your children with your words and actions and feelings about money.
One “money” talk is not going to do it (similar in concept to just having one “where do babies come from” talk). A few examples are, if you are going to buy a new or used car, show your child the research that you do and take your child with you when you go to the dealership and discuss your plan with them. Discuss choices your family makes with money. If we go out to eat more, we may not be able to go away on a vacation this summer.
Share the talking. Research shows that kids ask their moms most of their financial questions. Moms do your best but also admit if you don’t know something and go find out. Have everyone contribute to the money discussions with your children. Unfortunately, too many very successful moms still give the “Go ask your father” answer around money questions. Males and females both need this information. There is a “money” gap similar to the math gap where boys are more confident about money. As a society we have created this money gap and we need to make sure everyone – male and female understands and feels confident about their finances.
The author also strongly emphasizes not fighting about money in front of your children. Research shows there are negative financial consequences for your child and their responsibility with money if they see their parents fight about money. Try your best to keep fights behind closed doors and to present a united front with your children on money decisions.
There is way too much to write about kids and money. I hope this gave you something to consider. The first step is just to be more conscious, careful and purposeful in talking about money and what you are showing your children about money. They are learning by what they observe and feel from you.
Next week’s article is going to discuss ways to teach preschool and elementary aged children to wait for what they want.
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