When I was a kid, my playtime would consist of going outside and running around with my brother and cousins. The only telephone we had was a landline tucked away in the corner of our living room. My television viewing world consisted of the sum total of just 12 channels.
These days, eight year olds have their own cell phones and playing involves standing in front of an expensive video game console. As for TV, hundreds of channels brainwash our children with advertising messages around the clock.
It’s no wonder that many of our kids have developed a sense of entitlement with little money sense to match.
So in today’s consumerism driven society, how do we raise money smart kids?
Make Them Earn Their Money
Personal finance guru Dave Ramsey argues that children need to learn that money needs to be earned. He suggests that children be given money for chores they do, not a free allowance.
By connecting money to work at an early age, children begin to learn that money does not grow on trees. As a result they begin to value money more appropriately.
Experts suggest that you provide your children with a weekly allowance of 50 cents to a dollar for each year of age, but make sure that they have a list of chores that they are expected to complete.
Some suggest that you provide your kids with a base allowance and then allow them the opportunity to earn even more by completing specific tasks, like cleaning the garage for instance. The important point is that children should learn that money comes by the way of work.
Pattern Your Child’s Spending
When your child receives her allowance, ensure that they save some, give some, and spend some.
- Make sure they put some of their money in a piggy bank or deposit it into a bank account.
- Encourage giving to a charity of their choice or to the Church.
- Allow them to spend the fruits of their labor.
This helps ensure that you do not create perfect little consumers but people who also understand the value of saving and helping others.
Let Them Learn The Importance of Delayed Gratification
The ability to delay gratification may be one of the most important financial lessons that you teach your kids.
If your child craves a new toy or video game, make them save for it. This simple act of saving will allow them to appreciate their purchase even more and set up a lifetime pattern for successful money management.
Encourage The Ownership Mindset
Our advertising industry is great at transforming our little ones into perfect consumers. Turn that on its head by creating an ownership mindset amongst your children.
Discuss who makes their favorite toys, movies or video games. Then, together, purchase stock in a company with which your child has a connection.
If, for example, your son has an affinity for Apple products, purchase a share of Apple stock. If your daughter loves Disney movies, buy a share of Disney.
Over time your children can watch their investments grow and begin to truly understand the value of owning versus consuming.
Make Them Read
They say that the rich have large libraries while the poor have large televisions.
Encourage the habit of reading at as young an age as possible. As they grow older encourage your children to read autobiographies of the successful such as:
- Undocumented: A Dominican Boy’s Odyssey from a Homeless Shelter to the Ivy League or
- The Black Rose: The Dramatic Story of Madam C.J. Walker, America’s First Black Female Millionaire.
These books will plant the seeds of greatness in your child’s mind.
Be A Good Role Model
You are your child’s greatest teacher.
Your children silently watch your every step and inevitably will pattern their financial lives after your own.
You may have slipped up and made bad financial decisions in the past, but your children provide you with the opportunity for a fresh start.
Get your financial house in order so that you can provide your children with the right financial lessons that will guide them for the rest of their lives.
BMWK, how do you raise financially successful kids?