Raising Money-Smart Kids (2 minute read)

To say that “times have changed” since boomers were children is a vast understatement.

Now, twelve-year olds are using debit cards and apps to track their allowance, pay for things, and auto-deducting from their accounts. Even churches take cash-less, check-less offerings. And the impatient stares given at the grocery store to those paying by check? Awful.

Here are a few tips on affecting change in personal finance education for kids, teens, and family members starting their lives independently – hopefully, without repeating some of our mistakes.

1. Be part of helping the schools teach personal finance. Discuss ideas with teachers about curriculum for developing basic life skills, finance included. Like college tuition facts, what to know before seeking (or giving) a loan, and what compound interest is and how it works. Inspire the high school business department to move well beyond how to write a check or pick a stock.

2. Start matching savings dollar for dollar. Wisdom about the value of saving will be rewarded; your kids will learn that if they want to spend on something, it essentially costs them double because of the amount you’d match if they instead saved the money. Or, match their contribution to something they need and are willing to work to own, such as a car.

3. Dispel the notion that investing is like gambling. Some schools teach how to pick out a stock and then give bonus points at the end of the term if the stock increased most. Investing is not rolling the dice and hoping for the best…despite how many people act. Instead, lean into conversations about risk/reward such as reducing risk exposure through diversification, what an index fund is, what corporate social responsibility means, or comparing what it costs to invest in various financial products and services.

4. Be willing to discuss mistakes you’ve made. If you tell a youngster about feeling like you needed that cash out of your first-ever Roth IRA when you were 26, and what it cost you in the long run, it could help them avoid the same mistake. Be willing to share what you would do differently if you could go back in time and reverse unfortunate decisions.

In the end, being open with your family about finances and managing money will be a beneficial strategy for mutual exploration of ideas about eventual career choices, post-secondary education options, costs, adulting, and how to mitigate mistakes and learn from them – life’s most valuable lesson of all.

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