Communication and Money: How to Talk With Your Kids About Money by @BruceSallan

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What are the biggest “problems” in marriages? Kids? Money? Sex? Communication? All of the above? What are the biggest challenges in parenting? Yep, all of the above – except sex, of course, ‘cause we don’t even want to think about that!

How we communicate with our kids and what we teach them about money will define their lives. Heck, they define ours? How often is communication or most specifically, poor communication, at the root of any problem you may be having with a friend, spouse, co-worker, boss, or child? Maybe ALL the time?

When you combine both bad communication with bad money habits, you have a recipe for double jeopardy! First, let’s address the bad communication part of the equation. Many parents tend to think that their children will learn by osmosis, that simply because mom and dad may do something a good way that their children will do the same.

Sorry! It doesn’t work that way. You have to educate your children in all behaviors. Yes, modeling is important, but mostly modeling good behavior is just reinforcing what has been taught. Equally, modeling bad behavior might reinforce or encourage bad habits. I’ve written about Parental Hypocrisy, so I’ll let you read that column to learn more on that subject, but suffice it to say that the “Do as I say, not as I do” idea simply does not work!

So, if mom and dad are good savers, good budgeters, and know how to balance a checkbook, that does NOT mean that the kids will just pick it up by observance. They have to be shown and taught. There are many money games available, many online websites that can help, and classes that might offer instruction. But, nothing is better than teaching your kids your best practices when it comes to money.

After writing 25 columns for 12Most.com, I got to enjoy doing lists. So forthwith is a short list of topics, ideas, and suggestions for communicating good money skills and habits to children:

Allowance: allowance should never be an assumption, a given. Allowance should be earned by regular household chores and obligations. If those chores and obligations are not met, there should be deductions to their allowance JUST as there would be if they did not show up for a regular job or did not complete a free-lance assignment-for-hire.

Book Allowance: A separate allowance idea, when kids are beginning to read and especially if they love to read as my boys did for a long time, is to provide a summer book allowance. It should be a weekly amount that is just enough to buy an inexpensive book, but not enough to buy a special book. This then teaches them to save a couple weeks or more worth of their book allowance to buy the more expensive book. With my boys, the older one “got” that idea sooner than his younger brother. When the younger brother saw the more expensive book his older brother saved for, he then understood the value of saving. Win-win. They learn about money and they’re encouraged to read.

Christmas and Hannukah: Kids need to learn that the world does not revolve around them. So, when these big occasions come around, teach them that some of the presents go to dad and mom, other family members, while some presents/money is allocated for those in need. With Hannukah, it was simple because it’s an eight-day holiday. We designated certain of the days as days for others. While this is not a explicit money lesson, it is one that combines the value of money with the value of giving.

Saving and Delayed Gratification: Everyone, dad and mom included, should know the value of saving and the reward of delayed gratification. Parents can teach both to their children by showing them the things they are saving for – a new car, a new computer, etc. and give them an idea of how they’re saving for such items. Show how a paycheck or a gift of money is put into different places such as for bill paying and for that special item that requires an accumulation of savings. For littler kids, the separate jars idea often works: one jar for spending, one for saving for something bigger, and another for charity/giving.

Banks, ATMs, and Bill-Paying: Let the kids come with you to the bank. Explain what a deposit is. Have them press the buttons on the ATM and ask them how much money they think YOU need for a week’s spending or a week’s groceries. Have them sit with you when you pay the bills. Let them see how much it costs to “run” a house.

Checking the Restaurant Bill: Give the dinner or lunch bill, when it comes to the table, to your kid(s) to check and review for addition mistakes, deletions, or errors. Have them pay with your cash or credit card so they begin to learn the process. Ask them to figure out the amount of a tip and what your family believes is the right percentage for a tip. Teach them – perhaps – that “we” don’t order drinks, coffee, and such out at a restaurant because the cost of those drinks for a family of four is expensive. That’s what we do.

The above ideas are just the beginning to your kid’s education about money. I will continue this subject in a future column, let’s say “Part Two,” but I also welcome your ideas for great savings games, habits, and lessons to impart to our children.

Entrepreneurial Kids: Money Management – How to Raise Money Smart Kids!

It doesn’t take long before kids figure out that money has a special status in our society. Just watch the eyes of a 4-year-old light up at the sight of a penny lying on the ground, “Money!” or listen to their excited voices as they share just how much money the tooth fairy left them under their pillows.

Knowing how to manage your money is an essential life skill. As parents, we can start to educate and empower our children to make smart choices with their money. By teaching them to spend and save their money wisely, we are giving them a gift that lasts a lifetime.

8 Ways to Teach Kids about Money Management and Raise Money Smart Kids

#1: Is there a record of it? – Keeping good records of money saved, invested, or spent is another important skill young people must learn. To make it easy, they can use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year or you can use a spreadsheet. It really depends on the child’s style. Establish this system for each child in the family.

#2: Going Shopping! – Going to the grocery store is often a child’s first experience with money. Spending smart at the grocery store (using coupons, shopping sales, comparing unit prices) can save thousands of dollars each year for a family with children. To help kids learn, show them how to compare prices per item/oz/lb etc. Ask them questions to help them figure out what is the best item to purchase. On other shopping trips, you can talk to your kids about quality products, warranties, and other things to consider when making purchases.

#3: Let them spend! – Whether they make a great purchase or a poor purchase, they will learn from their spending choices. You can then initiate an open discussion of spending pros and cons before they make another purchase. Do not fall into the “I-told-you-so” conversation trap because they will stop listening. Asking them questions and letting them come to the conclusions on their own is the best method of teaching. Encourage them to do research and consider other things they could do with that money before making a purchase.

#4: Do they have ad sensibility? – Talk to your children about how to evaluate TV, radio, print, and digital ads. Encourage them to ask lots of questions about the ad. How does the ad make them feel when they see it/hear it? Is a price offered truly a sale price? Are there other products available that will do a better job, are less expensive, or offer better value? Remember to tell them that if something sounds too good to be true, it usually is.

#5: Drowning in Debt! – If you charge interest on small loans you make to your children, they will learn quickly how expensive it is to rent other people’s money. We did this with our daughter over the summer. She learned really quickly that a plane ticket costs a lot more when you pay for it with interest added on.

#6: Paper or plastic? – Every time you open your wallet, you have the opportunity to use paper (cash/check) or plastic (credit/debit). When you choose to use plastic, be sure to explain to your children that you are borrowing the credit card company’s money. If you pay it back within a certain time period, you get to borrow it for free, but if you don’t, you have to pay them lots of extra fees such as interest, late charges and more.

#7: Who’s knows your information? – Be very clear with children about protecting their personal information: name, address, passwords, social security number, bank account numbers, etc. Money fraud and identity theft can happen even with children. My daughter’s social security number was stolen when she was just a few years old! Shred receipts you don’t need for tax purposes and anything with a name and address listed on it.

#8: Family Finance Councils – Sit down as a family for regular group discussions. Talk about money goals; the difference between cash, checks, and credit cards; wise spending habits; how to avoid the use of credit; the advantages of saving and even investments. As your children get older, you can also discuss what is happening with money and economics locally, nationally and internationally.

All of this information will be important as they take on more responsibility for their own financial well-being. By helping them develop smart money skills early, you are setting them up for future success!

Want to raise a CEO Kid? Head on over to RaisingCEOKids.com to grab your copies of “40 FREE and Low Cost Tools to Help you Grow Biz” and “The Power of One” Webinar. For daily updates, LIKE RaisingCEOKids on Facebook!

Entrepreneurial Kids: Teaching Kids About Money – 7 Ways to Teach Kids About Money

Money certainly doesn’t buy happiness, but it does buy choices! Understanding money and how it can work for you or against you is critical in navigating the world.

As parents, we can start to educate, motivate and empower our children to invest, share, save, and spend wisely from an early age! Every single day there are opportunities to teach your kids about money. Using these small daily lessons, we can teach them to set goals with money and how to use their gifts to create more money!

7 Ways to Teach your Kids about Money

#1: Counting Money – Can your child count? As soon as children start learning to count, use money to help them practice. It will help them be familiar with the different types of money. Start by letting them count the coins as objects and then later you can have them count by value. For example, using nickels to count by 5’s or dimes to count by 10’s. Observation and repetition are really important so be sure to have them practice counting often.

#2: Share your Money Values – What are your values around money? Parents have an amazing opportunity to pass on values to their children as well as to assist them in creating their own values. Children will often adopt the values we have just by watching how we save, spend, and share with others. We can increase their understanding by telling them when we are giving to charity or purchasing new stocks and so on. Talk about your values with them and ask them what things they think are important. Their answers might surprise you!

#3: Differentiate between Needs and Wants – Is that a need or a want? Explain to your children that “needs” keep us alive and safe – food, shelter, clothes, etc. The things we “want” are everything extra. Explain how when we mix up our needs and wants, we end up overspending.

#4: Ready, Set, Goal! – Regardless of the age, people don’t reach goals unless they set them. Teach your children to set goals based on things that they want so there is motivation for them. As they reach their goals they will gain confidence to set bigger and bigger money goals. Soon goal setting and achieving will be a habit for them.

#5: Saving and Earning Interest – Encourage kids to save their money by teaching them about earning interest. Consider paying them interest in the money they save at home as it’s hard to appreciate the power of compound interest in a market where interest rates are low. Get your kids to help calculate the interest so they can see how fast money accumulates through the power of compound interest.

#6: Make Saving Money Easy – If you give your child an allowance, give them the money in denominations that allow for them to easily save. If the amount is $5, give them 5 one dollar bills and encourage them to set at least one dollar aside for their savings.

#7: Take it to the bank! – As soon as children learn to read and write, take them to the bank and open up a custodial account. Encourage them to make frequent deposits so they can watch their bank balance grow. When they are older, they can get student checking accounts to learn how to manage spending.

Always be looking for ways to teach your children about money. Managing their money is an essential life skill, one that rarely gets taught in school. Seizing every opportunity to educate and engage them with money is the key to raising an entrepreneurial child!

Want to raise a CEO Kid? Head on over to RaisingCEOKids.com to grab your copies of “40 FREE and Low Cost Tools to Help you Grow Biz” and “The Power of One” Webinar. For daily updates, LIKE RaisingCEOKids on Facebook!

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