Buy Me This! Teaching Kids About Money Basics
By: Becky Cummings
Remember the hours you spent in school hours learning how to multiply decimals, but somehow, we never learned basic money skills like investing or saving. Most of us got our money skills from parents with credit card debt, living paycheck to paycheck. I had my first credit card at 18 and learned all my money skills through trial and error. I luckily had enough sense to do some basic investing in a 403B with my first teaching career, but by my mid 20s I was living above my means, in debt, and living paycheck to paycheck. I decided it was time to break the cycle so I could prepare my kids to be abundant and you can too!
I first decided I needed to educate myself further so I could feel comfortable with money. Our beliefs about it can lay the foundation for how we handle it. Do you view it with fear, like you never have enough? Or do you feel it’s a blessing and it flows easily to you? Your thoughts about it are powerful. You will attract what you believe. I decided I wanted to be a millionaire and money would give me freedom to live my best life. I enrolled in Dave Ramsey’s Financial Peace University. My husband and I took the class together and we went weekly for several months. The first goal we had was to pay off our debt, starting with the smallest debts first working up to our house.
Over the years I read tons of financial books by wealthy people that gave great advice and implemented strategies that felt right to me. About a decade later I achieved my financial goal. I had paid off my cars, my home, invested in a rental property with cash, and found multiple streams of residual income, and became financially free.
How would I pass this wisdom down to my children? By making money and finances a regular part of their lives, right from the start. It begins by setting up a banking system for your children. In The Magic of Me: A Kid’s Guide to Creating Happiness, chapter 23, Giving from the Heart has a step-by-step guide for kids to do this! You can use 3 envelopes, jars, or buy a bank with 3 compartments, saving, spending and giving. When your child gets money from a holiday or birthday teach them how to break it up reasonably into the 3 parts. Some is for now to go and have fun, enjoy. Some is for later, a bigger goal that takes time to save for and the rest is for giving to a cause they feel passionate about. A conversation about each deposit is helpful for determining how much should go where but if you need percentage think 10% for giving, then split the remainder in half to save and spend. For example, if your child got $20, they would put $2 into the give compartment, $9 into the spend and $9 into the save. By encouraging them to deposit their give first they learn that money is about energy flow. By blessing others you send energy to the universe you are abundant and blessings will flow back to you!
Besides birthdays and holidays, it’s great to encourage children regularly to think about money. In our home we do this by giving the kids weekly funds to put into their compartments. This money is what they use to buy their toys, so it gives them the power to think out what they value and how they want to spend their money. They have weekly responsibilities they are expected to do, anything above this they can do for cash. We give them up to 5 passes to turn into and do a job around the house which they can get paid for at the end of the week. My littlest kids get $5 a week and my oldest gets $10. He also is expected to pay for his shoes out of his money.
This sounds like a dreamy system, but it takes consistency and organization. I tend to be a bad employer and forget to pay at the end of the week unless reminded. So, I recommend setting a reminder on your phone on the weekend to handle finances so it becomes habit. Or you can attach it to something else you regularly do. For example, handle finances before church or after Sunday brunch.
Don’t forget to give the kids a chance to enjoy the fruits of their labor by heading to a store every few weeks so they can practice making purchases. They will have great pride in their purchases when they are using their own money. They will begin to think critically about their choices and feel the value of money. You may want to set some parameters ahead of time such as no candy or drinks. But now you go to the store and your child says, “Buy me this…” you can politely remind them that they can buy it themselves. It’s a real game changer!
