I’m wiser today than I was when I raised my sons, and that’s a shame. I look back on how much energy I put into focusing on silly things when my boys were growing up and wonder how different things could have been if I had focused a little more on teaching them about personal finance.
These guys went to college with very little financial knowledge. They had no checking account (mom and dad were in charge of everything), did not understand how interest on interest could either make them rich or poor and had no idea how to start investing. Fortunately, it worked out and they are both good at personal finance, but it could easily have gone south.
Today we have three young grandchildren, and I’m determined to teach them everything they need to know about making money work for them before I die. There are at least five reasons for this.
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I’ll be honest here. I’m not sure how important this would be to me if it were not for what I’ve learned over the years financial abuse. According to The National Network to End Domestic Violence, economic abuse occurs in 99% cases of domestic violence. I would not care if I had grandchildren or great-grandchildren; there is no way on earth that I will send the next generation of our family out into the world without the solid armor of knowledge.
The girls were still wearing diapers when I started talking to them about the importance of making their own money. I would slip it in for walks to the park or games at Monopoly Jr. I would talk to them about finding a career that they love and creating their own financial nest, completely separate from everyone else’s financial nest. She can do whatever she wants, but she must always be able to stand on her own. We can help protect children by teaching them to be financially independent.
2. Demystify economics
The truth is that the earlier we start talking to children about finances, the less frightening it seems. It’s like learning to play a musical instrument or speaking a foreign language. The earlier we start, the easier it is to absorb. My husband and I send them a grant every week, and they understand that some of it is for spending and some is for saving.
The 8-year-old has invested in Schwab Stock Slices for a couple of years, selected her own shares from the S&P 500 list and looked at how her portfolio is performing. She learns about compound interest, risk and the importance of invest in the long run through real investment. When she’s grown up, this will be an old hat, a familiar way to handle money. And it all started with buying small pieces of stock in companies she recognized.
3. It’s not a “thing” in the United States
An international financial knowledge test for 15-year-olds revealed that the United States ranked 7th out of 15 countries, after countries such as Australia, Russia, Canada and China. What this means is that many children do not learn how to handle finances at home or at school. I want our girls to be the exception.
4. Teach our values
I recently interviewed 8-year-old Travis Brown, one of them winner of a personal finance competition sponsored by OneUnited Bank. One of his quotes has stuck with me. Travis said, “Kids need to learn how to count money. For example, if you’re in a store, the cashier may give you the wrong gear. Four quarters may not mean much to you, but that dollar would mean a lot to a homeless person.”
It’s clear that Travis’ parents have illustrated the importance of caring for others. Yes, they have taught their son about money, but more importantly, they have used these lessons to instill their values as a family. I want to do the same.
5. Increase their self-confidence
I first heard about a book called The code of trust for girls a couple of years ago. The authors, Claire Shipman and Katty Kay, worked with an opinion poll agency focusing on interpolations and teens. They surveyed more than 1,300 girls ages 8 to 18, along with their parents.
The surveys showed that between the ages of 8 and 14, girls’ self-confidence falls by 30%. Things like overthinking, addressing people and perfectionism strike, and some girls have trouble bouncing back and regaining their self-confidence.
It’s not just girls. According to licensed clinical psychologist Rachel Busman, boys’ self-confidence is at risk due to gender stereotypes. When a boy does not think he meets society’s expectations, he feels inadequate. And boys rarely have an outlet to express their feelings.
All this to say, why not do everything we can to increase children’s confidence in our lives? It is not just financial know-how we offer. It’s one more attention, and it’s a constant message that we care about them. Finally, it is a reminder that tomorrow is coming. After all, that’s what personal finance is all about – planning for the future.
This year’s Christmas will include some traditional gifts, but you should think that there will also be money-related gifts. For the 3-year-old, it’s a cute book called Money ninja. The 6-year-old will find a package of play money in his sock, perfect for practicing counting money. And the 8-year-old gets his first budget book, a place to track money in and out.
I’ve been told (more than once) that I’m ridiculous. I do not care. I will teach the children in my life how to take care of themselves financially – even if that’s the last thing I do.