Everyone thinks kids should learn about money: how it works and how to manage it. But everyone also seems to think it’s someone else’s job to teach kids about money. Money lessons should be taught at school. Borrowing should be taught by lenders. Banking should be taught by, well, bankers.
The best place for kids to learn about how money works—and the role it should play in their lives—is at home. While financial literacy is a hot topic, there have been times when other hot topics took the front burner. Remember the food pyramid? It’s still being taught at school, which is why we no longer have a child-obesity problem. Oh, wait . . . that’s not right!
When kids are introduced to the food pyramid at school, they learn all about which foods are healthiest, and how much of each kind of food they should include in their diets. But telling kids to eat five to seven servings of fruits and veggies each day has little impact if, when they get home, mommy and daddy serve up a hot dog, a bag of chips, and a tin of pop for dinner. Out the window goes the lesson just learned and kids come to know that the stuff they’re taught at school is irrelevant to their lives.
And so it is with money. We can talk until we’re blue in the face about how important it is to save, but if our children don’t see us saving at home, they won’t learn the lesson. We can talk about becoming smart consumers, but if parents whip out their credit cards every time something takes their fancy—or worse, because a kid demands it—they’re teaching kids they don’t have to prioritize; they can buy whatever they want whenever they want it, as long as they have enough credit.
But growing up in a financially sound home doesn’t automatically translate into financial success for kids. Children don’t learn about money by osmosis. They need to be taught the rules of good money management. They need lots of practice to incorporate those lessons into their lives. They need to be able to fail safely and adjust their thinking as they learn about how money works. And there’s a lot to learn. So we should start early.
Want to teach your children to be more financially successful? Want them to avoid living from paycheque to paycheque? Want them to steer clear of crippling avoid living from paycheque to paycheque? Want them to steer clear of crippling student loans and credit card debt? Then it’s time to take the reins of your child’s financial education firmly in hand. If you’re hesitant because you think teaching kids to be smart about money is a big task—one that you might flub—relax. As your child’s first and most natural teacher, you are in a unique position to be able to help, and you can do it in very small steps.
Think back to the nurturing you gave when your baby took his first steps. You encouraged him by celebrating even his smallest successes. You helped take away the fear by letting him hold your hands. You laughed, played, and had fun. And in no time at all he was walking. Raising Money-Smart Kids takes much the same approach: the learning should be fun, it should be given consistently, and it should be rewarded. Learning about money should feel good.
If you have more than one child, you know that no two children learn in the same way or at the same speed. You, more than anyone else, understand how your children learn; you adapt to each of your children’s unique needs so that over time they grow stronger and more confident. It’s not about boring them to death with money lessons. It’s about engaging them in conversations, sharing ideas, and reinforcing positive behaviour.
Since children love to be part of everything their parents do, day-to-day life offers you a multitude of opportunities for teaching them about how money works and the role it should play in their lives. But trying to decide what to teach and when can be daunting. With this book, you now have a guide to help you decide.
I’ll help you figure out how to best use an allowance: when you should give it, how much you should give, and how to set some expectations. I’ll suggest specific money lessons that you can teach at each age and stage of your child’s life, from toddler to teenager. I’ll show you how to teach kids about credit so they learn to use it smartly and to not make the mistakes some adults make. And I’ll help you set the habit of saving in place so it’s a no-brainer by the time your kid goes to work full-time. Oh, yeah, shopping . . . we’ll talk about that too!
I know you want the best for your kids. Like me, you want to make sure your children can stand on their own two feet and make good decisions about what to do with their money. If you follow the plan in this book, your children will be smart about money; they’ll know what they can, should, and won’t do for it and with it.
Here we go.