My primary job as a father is not to raise great kids. My primary job as a father is to raise a great grownup.
When I was growing up money talks weren’t a thing in our house. We didn’t have any financial education, money talks or life lessons from our parents. My brother and I had to learn this subject the hard way. And now being a grownup and having two kids I don’t want to make the same mistakes my parents did. We teach our kids about money and you should too.
“Money doesn’t grow on trees” or “Do you think we have a money printer under the bed?” these are the typical examples of money chats parents have with their kids. Too sad, because kids have no idea about what money is, what’s their value, and where the money comes from. And later we get grownups who make the same money mistakes over and over again; or even worse, we have socialists who think they have some kinds of rights to other peoples money.
When to start?
With our kids, we started this “education” process 2 years ago when they were 8 and 4 years old. I don’t believe there’s a minimum age that you should start at. Sooner you start easier it will be later, especially when you lovely “pumpkin” will turn into a small monster for a couple of age (read teenager)
But at the same time be flexible and consider your kids’ age. Don’t explain mutual funds and compound interest to your 4 years old son, you should teach age appropriately.
I believe there are four major principles every parent should teach the kids:
- You should teach them to work
- You should teach them to save
- You should teach them to give
- You should teach them to spend
That’s it, no less, no more. Four major principles that apply to any person from 4 to 44 years old.
Teach them to work
Money doesn’t grow on trees… Money doesn’t come from Santa nor magically appear in a wallet.
Money comes from work.
You work, you get your money. You work hard, smart or even both, you get more money. It’s really simple, there’s nothing magic about. And vice versa, you don’t work, you don’t get money. This rule applies to every adult person, and you know what? The same simple rule applies to kids as well. You should teach them that money comes from work.
At our house we don’t have allowances, we have chores and we pay our kids for running these chores.
Every Saturday evening is a payday. We count all the money they earned during a week and pay them cash. Some weeks they earn more, some weeks they earn less. Yes, sometimes kids are lazy and don’t want to do something, or they “forget” about one particular chore. It’s fine, they are just kids, but what it means is they don’t get paid for this uncompleted task.
I hope we are all grownups here and I don’t have to explain that we are talking about age appropriate work like cleaning dishes, or vacuuming and picking up toys, making their bed and so on. Please, don’t send your kids to a salt mine.
Also, we don’t want to mislead our kids and make them think that they will get to pay for every small thing they do, no. It’s not what we are trying to teach them. This is why we decided to have 3 types of chores:
- Chores kids get paid for
- Chores they do because they love mommy and daddy
- Chores they do because they are good people
My primary goal as a father is to raise good adults, not kids.
Teach them to save
The golden rule of building wealth is really simple, and it doesn’t come from me, it comes from THE Grandfather of FIRE community JL Collins
- Spend less than you make
- Invest the surplus
- Avoid debt
- Repeat all the steps
Our job as parents is to teach our kids to save (read spend less than they make). It’s really important especially in our crazy “get it now” society when everything can be financed now.
Hebrews 12:11 Now no chastening for the present seemeth to be joyous, but grievous: nevertheless afterward it yieldeth the peaceable fruit of righteousness unto them which are exercised thereby.
Do you like to wait, especially when you want something really bad? I hate it, seriously. Being a grown-up man with 36 years of experience I can easily get into the trap of justification when I want something really bad. I can easily find thousands valuable (for me) reasons explaining why I need this particular thing.
What to say about young kids? But it’s a trap and we all know that. Without teaching them now later we will get grownups with tens thousands of dollars in debt.
A couple of weeks ago my young daughter (5 years old) decided to buy a Lego. I knew she didn’t have enough money to buy it but we went to ToysRUs anyway, because I thought that was a perfect teachable moment for her. After 30 minutes later she found out that she didn’t have enough money, she was $10 short. I explained all the situation to her and gave her a couple of options:
- Wait a week or two and save the money
- Buy something else within the money she had
I was crying inside, the father’s heart was bleeding seeing my little princes upset because she didn’t get what she really wanted. Less than a minute my daughter said she would keep working and saving and would come to the store in a week or two.
I was so happy, it was really hard for me to forget the reason why we came to the store and to buy her the LEGO she wanted.
A week later we came to the same store and here we go, the proud owner of the new LEGO constructor
Teach them to give
Selfish people stink, they are. There’s nothing worse than a self-centric person who thinks nobody but himself.
No, seriously, there are only three things you can do with money: spend, save and give. And the most joyful and awesome things to do is to give. Give them to the poor, help a single mother to buy groceries for her kids, or buy school supplies for the foster kids. Do something with the money to help others.
I don’t believe in a concept of helping others when you have enough money. You will never have enough money. The more money you have, the more money you will want. And it’s easier to start when you have little, and developing the muscle of giving. And when you have more money it will be easier for you to give generously and cheerfully.
Teach them to spend
And last, but not least is we should teach our kids to spend and spend wisely. We all know this proverb
I’M NOT RICH ENOUGH TO BUY CHEAP THINGS.
Have you ever bought something cheap to save some $ and later you had to spend extra $$ because your cheap thing was broken? I have, and unfortunately, I still do it sometimes.
It takes times to understand and, more important accept that a good, quality made stuff costs money. Yes, you have to pay $$ instead of $ but this thing will last you for more.
I don’t know about your kids, but my kids have a tendency to buy more cheap toys instead of less but quality made ones.
“Hey, dad, we just bought 5 awesome toys from a Dollar Tree” and of course a couple of days later I find all these toys broken.
Teach your kids to be frugal, not cheap.
Do you teach your kids about money? Please share your stories and advice below in the comment.