Family finances have evolved throughout humanity. Back in the day, families mainly relied on bartering. It was a simple system where goods and services were exchanged instead of using cash. Financial planning was straightforward too; it was all about making it through each season. But as time passed, especially with the Industrial Revolution, money started playing a bigger role in family life. People began earning wages, and budgeting became a necessity to make sure there was enough to go around.
Fast forward to the 20th century, and things got a bit more complex. Suddenly, we had credit cards, mortgages, and all sorts of financial products that made it easier to buy things—but also easier to fall into debt ballooning the cost of life. Financial planning was complicated as well, now you had to include interest rates and amortization charts into your handwritten family financial ledger.
Now, here we are in the 21st century, where digital banking and financial apps make managing money more accessible than ever. Yet, it’s also more confusing with products like block chain and crypto currency. Which is why it’s so important that we teach our kids about money from an early age.
Our kids will eventually need to manage their own finances, and the sooner they understand how money works, the better off they’ll be. As dads, it’s up to us to equip them with the tools to handle their money wisely for their futures. I’m not saying we should teach our children to save “EVERY” penny and never enjoy their life. But think about this: how different would your life look if you had saved more in your twenties rather than spend it on clothes, shoes, cars, or alcohol?
Would you trade those impulsive purchases back then for some extra cash today?
Exactly!
If we want to set our kids up for financial security in the future then we must teach them as soon as possible. But before we can do that, we need to make sure we’re on top of our own financial game. That means understanding and implementing budgeting, saving, managing debt, and planning for the future strategies into our own lives.
Because the best way to teach is by example!
I understand that it’s not as simple as snapping your fingers and your shit is together financially. There are some real issues with money we have and most of them have been taught to us by our parents or older role models.This is where we learn our own money principles. Growing up, money wasn’t something my family discussed much but I remember my mother talking about ‘robbing Peter so she could pay Paul‘. 😉
Even after I became a dad, I handled money the way my parents always had—paying the bills, sometimes juggling payment plans, and occasionally stretching my credit card too far. We were focused on getting by, making sure the important bills were paid, and keeping food on the table.
It wasn’t until my wife and I started thinking about buying a house that I realized how close we were to a financial disaster. We were just one unexpected expense away from losing everything. That was a wake-up call. We got serious about our finances, found help through books like The Total Money Makeover by Dave Ramsey and various budgeting tools, and slowly we started to get our financial house in order. That experience taught me that money is more than just something to acquire things—it’s a tool that can provide freedom and security if used wisely. But if not managed well, it can be the very thing that keeps you from achieving your financial freedoms we all want.
As dads, we want our kids to be prepared for the world, and that includes understanding how to manage money. This lesson has become even more critical for me now that I have three kids in college. Yes, three kids about to step into the world as full-fledged adults and I want them to know how to protect themselves financially.
The Importance of Teaching Kids About Money
First off, getting an early start on financial education is one of the best gifts we can give our kids. When kids learn about money early, they develop habits that last a lifetime. These aren’t just habits like saving or budgeting—they’re lessons in responsibility, decision-making, and understanding the value of hard work. It’s about more than just numbers; it’s about setting them up to be independent, responsible adults who can navigate life’s financial challenges with confidence.
For instance, when kids learn about money through everyday activities—like saving part of their allowance or watching how you budget for groceries—they grasp these concepts more easily. This hands-on experience prepares them better for the financial responsibilities they’ll face as adults. By making money a normal topic of conversation, we can demystify it and remove the stress that often surrounds it.
Misconceptions About Teaching Kids About Money
However, there are some misconceptions that can hold us back from teaching our kids about money effectively. One common issue is overcomplicating things too soon. We might be tempted to dive into topics like stocks or credit scores before our kids are ready. It’s crucial to keep lessons age-appropriate and simple. Start with the basics, and build from there.
Another roadblock is the fear of talking about money altogether. Many parents avoid these conversations because they don’t want to stress their kids out or because they feel uncomfortable discussing their own financial struggles. But the truth is, avoiding the topic can leave kids unprepared for the realities of managing money in the real world. It’s better to have these conversations, even if they’re a bit uncomfortable, than to let our kids learn the hard way.
Actionable Steps for Teaching Your Kids About Money
So, how do we go about teaching our kids about money in a way that’s effective and practical? Here’s a breakdown of some actionable steps you can take:
- Start Small and Simple: Begin with the basics. For younger kids, this might mean using a piggy bank to teach the concept of saving. Explain that saving money today means they’ll have more to spend on something they really want later. As they get older, you can introduce more complex ideas, like the difference between needs and wants, or how to set a budget.
- Involve Them in Budgeting: One of the best ways to teach your kids about money is to let them see how you handle it. When you’re budgeting for groceries, bills, or even family fun, involve them in the process. Show them how you allocate money for different expenses and explain why it’s important to stick to a budget. This hands-on experience helps them understand that money doesn’t grow on trees and that every dollar has a purpose.
- Use Allowances as Teaching Tools: If you give your kids an allowance, use it as an opportunity to teach them about money management. Encourage them to divide their allowance into three parts: one for saving, one for spending, and one for giving. This simple exercise teaches them about prioritizing their money and the value of generosity. Over time, you can introduce concepts like saving for bigger goals or understanding the impact of spending decisions.
Implementing These Steps in Your Daily Life
To make these lessons stick, consistency is key. Here’s how you can implement these steps in your day-to-day life:
- Weekly Budget Meetings: Set aside time each week to sit down with your kids and go over the family budget. This doesn’t have to be a long or formal meeting—just a quick chat about where the money is going and why.
- Savings Challenges: Turn saving money into a game. For example, you could challenge your kids to save a certain amount of their allowance each month, with a reward for reaching their goal. This makes saving fun and helps them see the benefits of setting financial goals.
- Real-Life Examples: Use everyday situations as teaching moments. If you’re at the store, talk about why you’re choosing one product over another. Explain how sales, coupons, and discounts work. These real-life examples help kids see the value of smart spending.
- Open Conversations: Encourage open conversations about money. Share your own financial successes and mistakes, and let your kids ask questions. This transparency helps them learn that managing money is a skill that takes time to develop.
Teaching your kids about money might seem overwhelming, but it doesn’t have to be. Start with the basics, keep it simple, and make it part of everyday life. As your kids grow, so can their understanding of finances. Remember, you’re not just teaching them about money—you’re giving them the tools to be independent, responsible adults.
And here’s a thought—consider incorporating lessons on giving and charity. Teaching your kids the importance of helping others with their resources can instill a sense of responsibility and empathy, making them not just financially savvy, but also kind-hearted individuals.
Remember, the journey to financial literacy is ongoing. Keep learning, keep teaching, and enjoy the peace of mind that comes with financial security.
🍻Cheers to raising financially savvy kids!
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Resources for Further Learning
Here are some great resources to help you teach yourself and kids about money:
- The Total Money Makeover by Dave Ramsey: A straightforward guide to managing finances.
- Mint.com: A free budgeting app that helps track spending and saving.
- The Opposite of Spoiled by Ron Lieber: A book focused on teaching kids the value of money and generosity.
