Personally I believe that teaching your kids the value of money at an early age is an essential part of parenting. The biggest problem is that most parents are not in a position to have this talk. They either lack the knowledge or they have problems with their finances themselves.
When I was in elementary school once a week a local bank used to come in and set up a table with a few teller windows. Students were allowed to make deposits into a savings account with the bank. I thought this was a great way to teach children the basic principals of saving from an early age because it allowed them to see interest being accrued. It also taught them the importance of being responsible with money.
Personally I have always been a numbers guy. Because of that I enjoyed the other aspect of the bank in school. They would allow students to act as bank tellers (with supervision). This helped instill an even greater since of the value of money because we were responsible for recording the deposits.
One of the best ways to help your children understand the importance of money is to talk to them. If you are going to a store to purchase something and you use a credit card explain to them how a credit card works. This will help give them a better understanding about the good and the bad scenarios that can come from using credit.
Make sure they understand what can happen if you don’t pay your credit card bills on time. Make sure they understand what will happen if you buy more than you can afford. It’s not fun but it’s something that all children need to understand at the right age.
I am a firm believe in children being included in family talks about finances. Obviously there are some things may need to be left out, but for the most part include them in the discussions. This will help them see what it takes to run the family. If you are saving for their college education or for your retirement make sure they know this and that you talk about what your plan for its growth is.
There is really no right or wrong way to talk to your kids about the value of money. This process is a marathon and not a sprint. If you start talking about these issues early and frequently they will feel more and more comfortable with their own financial choices later on in life.
Do you have any special ways that you talk to your kids about money?
I don’t have children yet but teaching them work ethic and managing money will certainly be things I focus on. I think teaching them to work (via getting paid by doing chores) is a great way to show them that hard work = compensation. I’ll probably also make them divvy their earned income into various categories: giving, spending, and saving.
I agree that this is quite important. Your kids will keep those lessons with them for life and when it comes from their parents they will respect that advice so much more. I just wonder what the right age is to teach them some of that stuff. Obviously some of it will just go over their heads if they are too young.
“I am a firm believer in children being included in family talks about finances.” This is the crux of the problem. Many parents don’t include their children in these kinds of family discussions. They either don’t think it’s necessary, or they just don’t think it’s an appropriate subject matter to discuss with their children. I’m all for teaching children about money, and preparing them to deal with money matters when they become adults themselves.
Great thoughts! I’m just curious though: When you were in Elem school how did the bank manage that? Wouldn’t you be too young to have an account (even a joint account with a parent)?