Teaching Children The Importance Of Money

Many children find themselves hopelessly in debt after leaving home. They go off to college, wanting to take on the world. The independence they suddenly experience leads to decisions that are not always best for them. Many of them have not had to deal with financial responsibilities. They are lured into credit card and loan offers, finding themselves drowning in debt in a very short time.

Twyla Prindle says, “Studies are now showing that for the very first time since the great depression, we now have a negative saving rate. Many of us are living check to check, and just getting by. All of us want the best for our children, and getting by is not the best. If we teach our children basic principals now, they will become common sense to them later.”

Twyla experienced financial ruin after graduating from high school. She was rebellious and went off to college to live her own life. She had at least 15 credit cards. Unable to keep up all the payments, the bills piled up, and creditor’s phone calls were constant. Thinking all of her financial woes would just go away, Twyla chose to ignore them. After graduating college, she was offered a job in her field of study. The employer did a credit check and rescinded on the job offer. Bad credit had caught up to Twyla at an early age. It took years to pull herself out of the hole she had gotten herself into.

She learned from her mistakes and now used her real life experienced to teach children the meaning of money. Through her financial literacy tips, she hopes others will not fall into the same financial traps she did.

Begin teaching children financial literacy at an early age. Three and four year olds can learn to understand the concept of money. The earlier a child learns how to deal with money matters, the better. There are many resources available to help parents begin:

- Games are one of the best ways to get a child interested. Play the games together and make it fun for your child.

-The internet has a wealth of knowledge for parents to utilize. There are online games, puzzles and children’s websites that teach money skills.

- Books are another resource for parents. Check the children’s section of the library or book store for basic children’s money counting workbooks.

- A family finance night is a terrific way to spend time together. Talk about the bills you have to pay to keep the family financially secure. Discuss the importance of paying bills on time and not overextending yourself. Children will learn by your example.

Charitable giving is one of the most important financial lessons you can teach your children. Make them aware that there are many people less fortunate than they are and it is our responsibility to help. Giving to the needy is an important part of life.

Children watch what their parents do. If parents are charitable givers, then the children will follow in their footsteps. Be a role model for your children. Find a needy family in your town and make charity boxes as a family and deliver them together.

Charity does not have to be only about money. Teach your children that volunteering is just as valuable as money. Children can use their time and talent to give back to the community. Discuss with your children the volunteer opportunities in your area. Help them decide the one that would be best for them.

Discuss the importance of setting a financial goal. Help your children create short and long term financial goals. Collect different magazines and have your children make goal posters. The posters are a visual aid reminding your children what type of financial goal they want to accomplish.

Talk to them about a basic financial plan, whether they want to set up a savings account, save for an item they want, and assign chores for them to learn the value of money.

Young Adults Need To Seek Wealth Literacy, Not Financial Literacy

Today there is much talk about how young adults are financially illiterate as if financial literacy were adequate to build wealth. Millions of people have read one of the best financial literacy books out there Rich Dad,Poor Dad” yet there is a loss of translation somewhere between the sound principles of financial literacy and their utility in building wealth. Somewhere, there still is a bridge to building wealth that books such as Rich Dad, Poor Dad” have failed to cross. This bridge is one of not financial literacy, but one of wealth literacy. If I were a university President, I would ensure that my business program offered the following courses:

(1)How to Leverage Money
(2)The Four Pillars of Wealth
(3)How to Invest Money
(4)Gold and Precious Metals
(5)How to Leverage Time
(6)Debunking Widespread Investment Myths; and
(7)Networking

There would be several more lessons that I would provide after this basic curriculum was completed, including:

(1)The Connection Between Politics and Investing; and
(2)Leveraging Technology to Build Wealth

With an adequate foundation of knowledge in all these courses, a young adult would be prepared to build wealth without so much trial and error, struggle, or outright failure. Instead, no level of traditional institutions of education teach such courses and instead remain mired in curriculums skewed towards theory and not applicability such as statistics, economics 101, marketing and finance. If you think about it, even at the Master level, none of these traditional business or financial literacy courses will really teach any student how to build wealth. This is precisely the reason why young adults must seek an entirely different foundation in order to understand how to truly build wealth.

Various surveys that I have stumbled across that assess the financial literacy of young adults are inadequately structured because they focus too much on traditional concepts such as stocks, options, real estate, and so on versus granting an assessment on whether young adults are knowledgeable about any concepts necessary to build wealth. Being financially” literate versus being wealth” literate are two entirely different concepts. I believe that one can be financially literate while not being wealth literate.

The difference between financial literacy courses and wealth literacy courses is this. Financial literacy courses focus on topics such as budgeting, basic understanding of investing concepts, funding retirement accounts and so on concepts that young adults rarely consider but still not concepts that will help them build wealth. Financial literacy courses teach young adults what they need to do to build wealth but grants them none of the tools they will actually need to successfully build wealth. Furthermore, they never inform them on actionable steps to build wealth other than common sense such as learn how to invest, max out your 401 (k) contributions and so on.

For example, if one was a basketball player, the comparable level of a financial literacy course would be to tell a power forward that he needs a good array of post-up moves close to the basket, a sweet outside shot to make opponents respect his range, a quick first step to create off the dribble and a solid defensive game so that opponents can not exploit him for being a one-dimensional player. But after telling the power forward that, there would be no further explanation but a wish of good luck” and a pat on the back. A wealth literacy course would actually teach the athlete specifically what he would need to do to achieve success in each area of his game that would make him a premier athlete.

Telling young adults what they need to do will have little impact on improving their quality of life or making a successful transition from young adults into financially independent adults. Providing a toolkit for how to do so is far more important. To this end, seeking courses that teach wealth literacy instead of financial literacy to young adults is much more important.

How To Talk To Your Tween About Money

Teaching financial literacy has been my passion. Over the years I’ve had an opportunity to speak to parents who want to know how to talk to their children about money and want tips to help them become more independent before they go off into the real world.

For many parents it seems like just yesterday that your children were on their way to kindergarten, but now that they’re in middle school things seem to be happening way too fast. Tweens seem to go from having play dates to group movie dates right in front of your eyes.

And they’re fashion conscious and brand sensitive far earlier than we ever were. This is all the more reason for us to help them get a financial grip on money and the need for saving by talking to them early and often about ways to save and spend money responsibly.

Here are a few things you can do to get your tween ready for the day when you’ll need to cut the strings and watch them spread their well-prepared financial wings.

Giving your tween an allowance is a great money move. It will help you as a parent reign in their budget-busting requests while teaching them the value of a dollar and saving for the things they really just “must” have.

In her book, “Kids and Money: Giving Them the Savvy to Succeed Financially,” author Jayne A. Pearl says this about giving your children a fixed spending budget. “Allowance is an effective way to start transmitting to your kids financial literacy, values, and decision-making skills.”

When tweens have access to money they can better understand the meaning of it and the proper ways to use it. Trying to help them understand the basics of money management using something that they have earned and saved for is powerful. Often that new “thing” they just had to have when you were paying for it becomes less important to them when they come to realize that it will greatly reduce the amount of money they will have left.

If your family doesn’t embrace the allowance concept but still wants to help your children have first-hand experience with money management, another way to teach tweens about money is through interactive learning experiences and board games such as:

Life
Payday
Monopoly Jr.
The Allowance Game and
Cashflow for Kids

These are all wonderful ways to teach lasting lessons in an entertaining way. Not only will these games help your child strengthen their math and problem solving abilities, they’ll also understand basic money concepts.

Finally, encourage your children to save with a purpose and if possible offer to add a small percentage to whatever they have saved. This teaches the lesson of compound interest and how money grows if left untouched.

The next time your child wants a new bike, skateboard or series of Karate lessons use it as a chance to challenge their desire for what they want by having them save for it. As an extra incentive agree to match their savings dollar for dollar up to a set amount or a specific period of time.

The benefit of this to you is that your child will develop discipline and a habit of not spending every dime they get their hands on. Plus, when you make the goal one that’s reachable even if they fall short, you can assist them so they will be encouraged to try again next time.