12 Most Vital Tips for Teaching Kids About Money
A GEN Yer recently said to me: “Our parents messed up our generation’s future by giving us everything we wanted. Now we struggle with restraint and earning a living.”
Wow. I was taken back by her claim.
If we believe GEN Y’s perspective on the struggle, it makes sense to teach the next generation (and maybe even GEN Y) the reality of making money. An early understanding of money plants the seeds of ability for inevitable decisions and weightier responsibilities.
Here are my 12 most vital tips on money to teach our youth for future success at work. Perhaps you will add #13, #14, and #15 in the comments section below!
1. What it looks like
A fifteen year old worker in a fast food restaurant called the police when a customer paid with a two dollar bill! He had never seen one and thought it was counterfeit. The customer was both incredulous and angry. The ruckus was troublesome to the business. It was quite unnecessary — if only someone had taught him what money looks like.
On a lighter note, I was standing at the train station next to two teens at the ticket machine. As the machine spit out dollar coins in change, they exclaimed “What the hell are these?” I said, “those are dollar coins.” He replied, “What do I do with them?” I said “it’s money.” His look of disbelief is unforgettable. I offered him dollar bills for the dollar coins and he said, “Thanks, that helps me out a lot.” I still chuckle about this!
2. What it takes to earn it
Discussions about earning money can lead to wonderful lessons on family, sharing, sacrifice, and restraint. Whether you make six figures or a more modest living, it is valuable for kids and teens to know how to earn money. Try a dinner discussion after “take your children to work” day to kick off the learning in a practical way.
When they begin to think about college, or trade school, or work after high school, your teaching will have painted a true and vivid image for the future. It may help them stay on course during the struggles of high school and help them plan their next steps.
3. What it gives you and what it doesn’t
When you picture sitting down to discuss values with kids and teens, you often anticipate them rolling their eyes and texting their friends. If however you talk about values in response to their requests for everything, you help them to see what money does and doesn’t provide.
4. What it costs to borrow it
Many kids and teens have no idea that you must pay a significant amount to borrow money. They will need to know this as adults for everything from buying a house or car to starting a business. Your current credit card interest is a great way to teach the cost of borrowing — and dissuade them from demanding everything now!
5. What happens when you overspend it
Beyond the cost of borrowing, discussing the long-term effects of overspending can prevent life long problems. There are hundreds of stories on the Web of young adults trapped deeply in debt after college or trade school. Paying off debt means more than just having to share an apartment or living at home with parents. It stops them from investing part of their paycheck early and that affects life long possibilities and retirement.
6.What you get from not overspending it
Although delayed gratification is not the most popular value today, there are many benefits to not overspending. Peace of mind for unexpected crises, living a future dream with money saved, and reducing landfill waste by avoiding unneeded purchases are just a few that come to mind.
7. What you get from investing it early
You don’t have to be great at math to reap the benefits and the magic of compound interest. The earlier you all begin to save/invest even a small amount of money, the better off you will be financially. There are even YouTube videos teaching this and online calculators like Suze Orman’s to figure the total! Give them a kick start to future security.
8. How to resist peer pressure to lend it
Kids and teens are under tremendous peer pressure to look good, fit in, and be a good friend. Does that pressure extend to lending money to friends? A difficult moment even for adults to handle, it must be even worse for the young. Discuss with kids and teens how and when to say no. It will help them handle this awkward moment now and as adults. 5 Tips on How to Refuse Lending Money to Friends
9. How to withstand peer pressure to spend it
Perhaps the best way for youth to learn how to resist peer pressure to spend money is for adults to resist their kids’ pressure. What a great venue as well for having kids explore other ways to be happy, tap their own creative ideas for having fun, and develop a closeness with others who share these values.
10. 100+ ways to earn some
Although my adolescence is a distant memory, I remember earning money in many different ways in those years. Have a fun contest with your early teens and have them list how many ways they could make money? Connect it in with the magic of saving early ( #7 above) and celebrate with them when they have reached a certain level of saved earnings!
11. How to assess a great deal
Daily life is filled with ways to teach how to find great deals — vacation planning, online vs. in store purchases, cheapest price vs. quality and durability, bargaining at flea markets, cooking vs. buying prepared food, and the list goes on. It develops critical thinking and makes learning interesting. My parents were great at this and their knowledge has served me well. I love a great deal! At the end of my first year of work after college, I had $2000 in the bank.
12. Their responsibilities when you are making it and they aren’t
Parents pay the bills so kids and teens can invest their time in learning. Although the days of widespread child labor in America are long gone, the past can teach them that going to school — instead of having to work — is a privilege. There are many countries where children don’t have this privilege. For those who do, it comes with the responsibilities of respecting parents’ hard work, applying themselves in school, and investing in their own future.
Real life is filled with great opportunities and tough choices. These simple lessons give them the gift of our experience and teach critical thinking and decision making — now listed as the most critical emerging skills in this age.
And according to my GEN Y friend, it’s how to prepare them for the future and not mess up their lives!
Featured image courtesy of thefixer licensed via Creative Commons.