4 Tips for Teaching Financial Education at Home
“I wish I knew that in high school.” So many parents have grown into their lives and found themselves uttering this exact phrase or something very close to it. It stings a little more when it comes in a conversation with our kids. Usually we are reminded of a simple mistake we made that would’ve paid significant dividends (sometimes literally) to us now, years later in our lives.
When it comes to money we think about the CD’s, tapes or DVD’s we bought and barely used. We think about the excessive money spent on clothing we wore only a few times. We don’t even think about the micro economic decisions we made, eating out or buying unnecessary drinks/coffee at the store when we could’ve waiting til we got home and saved the money. We bought shoes or sneakers. We went out with friends and didn’t even consider the amount of money we spent until the next day when we checked our account. We chalked it up to a good time and moved on. We got credit cards and found ourselves taking years to pay interest and sometimes even worse, back taxes. That’s if we were able to pay it at all. Then, if we didn’t we (and some still to this day) we pay ridiculous interest on loans and credit cards. We limit ourselves to renting when we know we make enough money to buy. It all comes back to us in the phrase “I wish I knew that in high school.” Almost like, now that we realize that it makes it all okay. But it’s not and that hurts.
I heard a phrase that has always stuck with me. “Sometimes our greatest pain can be our greatest purpose.” What a better way to use that energy than to give our kids a financial education? Not to take away the fun they can have as kids but to teach them that just a little bit of consciousness now can pay them 10 fold later. If they just make a couple different decisions with their time and money and channel it to the right place, they can achieve the most important thing in life… Freedom. Because yes, money does not buy happiness but it does buy the freedom to do what you want. They can take that vacation, have a big family, spend time with that family and support other friends or family members that may fall on hard times.
But how? How do we get kids to feel any sense of urgency to learn it now? How can we, at home teach them these things? Well, the first thing to understand is it’s not about teaching them everything they need to know. As I have taught kids from Silicon Valley to Africa I have learned a few tips and at home exercises that have proven to be effective…
- The desire to learn is greater than any single piece of information.
It’s less about giving them the information and more about teaching them the value of money and instilling in them the desire to learn more. Markets change and a great investment today may not be a great one tomorrow. The desire to learn and to seek out information or how to analyze a good investment is a far better strategy. That will never change. Keep reading and I’ll share some ways to do that.
- “Supermarket Sweep”
This is when you give your kid ( if you have more than one kid take turns on different days doing this) a certain amount of money and you tell them they have to buy the groceries for dinner. You first figure out how much you usually spend on dinner. Give them a limited budget and tell them that they have to make all the decisions. It can be a fun activity and actually get them to take a ride to the store with you. For your families sake it is always okay for them to ask you questions while they are there. You can tell them to meet you at the front while you get other things. Then before you buy you ask them what they want to make and see if they did a good job. Did they get spices? Is it healthy? Will it be enough food for every in the house? Sure, they can take shortcuts and buy frozen food but talk to them about that. Would they really want to live like that every day? How you preface that at home will have a big effect. To save yourself a bad meal, set some ground rules before you go. Depending on your families diet it can be anything. Chose a protein, vegetable, a starch and maybe a dessert if they do a good enough job. Teach them the difference between store brand and name brand. Maybe even tell them if they save money they get to keep it. (Especially if they pick a great meal). There is a lot of things they can do with this. Side benefit: You and your family talk and have a great time and even create a memory
- A lot of people give allowance for money but how about money for educating themselves?
Wealthy people believe knowledge is the best investment. Create a book list of different length and difficulty books they can read for money. Have a chart at home so they can see their progress. Make it worth their while but ion that case tell them you will never give them money. But you will always reward them for educating themselves.
- Create “Four Buckets” arts and crafts activity.
This is one of my favorite activities and it really can be done with kids of all ages. Wealthy people are known for being deliberate with their money. They set aside money to save, for expenses to invest and a lot like to give back as well. Gather 4 empty jars, shoe boxes or really anything that can hold money. Have them decorate them, paint them, label them and place them somewhere they can see them. Teach them to spread their money our, even if they don’t know why yet if they are really young. Have them set one goal to save their money for. Take they investing money at the end of the month and buy a stock with it. A good tip is to buy stock in a company they like. I’m not telling you to lose money and as the parent it’s your decision (insert financial disclaimer here). When you buy into a company they like they will be interested. They might look it up and learn about the company and why the stock is doing good or bad. Remember the whole point when they are young… SEE NUMBER 1.
Remember, even if you don’t consider yourself a money savvy individual you can still do this. It’s really about being open about money. Why you do one thing and not another. Remind them, no kids likes to be told what to do but without a financial education, once they get older, their boss dictates their life now. They g et told how much vacation time they can take. They get told when to get up and get to work and they get told when they can leave. They get told how much they are worth. Help them imagine that if they have money they get a job because they like it. They can work because they WANT to, no because they HAVE too. That’s a different kind of freedom. Implementing these strategies when they are young and you may never hear from your kids “I wish I knew that in high school”