Raising money smart children is a series of ongoing observations, conversations, and experiences. It is a process parents are well advised to start early. A 2013 Cambridge University study revealed adult money habits are set by age seven!
Teaching kids about money doesn’t have to be difficult. However, it does take time and lots of repetition. There are not any secrets or silver bullets. You and your children will get out of the process exactly what you put into it. If you pour enthusiasm into your parent teaching, you and your kids will enjoy it more. If you and your partner get on the same page, your chances for better results increase. And, your own finances may improve. Here are six tips to help you make the financial education process more rewarding for the entire family.
TIP 1. INVEST IN READING
Put yourself and your partner on a personal finance reading program. If you make money choices daily, and we all do, then it makes sense to continually learn about the topic. What you learn will strengthen your financial knowledge by either confirming or changing your existing thinking. Google articles, interviews, and books. Or go to the library and do the same. Invest time with some of the worlds’ great minds on money, present and past. Warren Buffett. Janet Bodnar. Benjamin Franklin. There are lots of excellent options. Find and fill your thinking with voices that inspire you to action. Knowledge is useful. Applied knowledge produces results.
TIP 2. PUT IT ON PAPER
Write down the main points of your money philosophy. Then, refine the philosophy to short sentences. Catchy slogans are best. They are easy to repeat and remember. Your philosophy should minimally cover four areas: (1) saving (2) investing (3) spending (4) giving.
TIP 3. DON’T DUMB IT DOWN
Translate your philosophy to kids speak. Whatever you do, don’t dumb or talk down to kids. Presume kids are smart. They will “get it” – the concepts – if you can explain them. Time Magazine covers this principle in its article, Infants Understand More Than You Think, Study Shows. Here is an example. Many personal finance experts advocate paying yourself first. Warren Buffett supports the principle but says it differently – ““Do not save what is left after spending, but spend what is left after saving.” Sammy Rabbit, the children’s character my team developed to deliver financial messaging to kids says the same thing three different ways. “Saving is a great habit!” “From every dollar, save a dime!” “Save one out of ten, again, again, and again!”
Here is an additional translation tip. Lay a foundation and develop awareness for a concept or term by using it in a sentence with an adjective a child is likely to understand. For example, one of the most motivating and powerful concepts in personal finance is compound interest. You might introduce the term by sharing the following: One of the most fun reasons to save and store money up is to watch it grow and compound. It’s amazing! When you save money, when you store it up for another time, your pile of savings grows and grows. It compounds. Your pile gets larger and larger. That’s a super duper thing!
If you want assistance, check out Sammy Rabbit's Slogans on Money! Use them with your kids or as a catalyst to inspire your own slogans.
TIP 4. REPEAT YOURSELF
There is no way to sugar coat it. Mastery requires repetition. And, unfortunately, the law of diminishing returns applies to parental guidance. So, stay relevant by using a variety of methods to reinforce the same messages over and over, again and again. In addition to conversations and slogans, I recommend storybooks, songs, games, activities, and experiences. Grocery shopping, trips to the bank, yard sales, lemonade stands, going out for family meals, birthdays and holidays are all terrific teaching opportunities.
TIP 5. SHOW YOUR FAMILY THE WAY
This is where the rubber meets the road. Be a great role model. If your behavior matches your words, it increases the chances of your kids adopting the behavior. Lead by example. Show your family the way!
TIP 6. IF YOU DON’T DO ANYTHING ELSE, DO THIS
If you are only going to teach your children one thing about money, teach them to get in the habit of saving. Here is why. Saving has multiple benefits. It is a cornerstone upon which many other money and success skills can be taught. Saving teaches discipline, delayed gratification, preparedness, planning and goal setting. Saving protects us from poor spending choices. Saving positions us to invest with less risk. Saving provides more freedom and choices. Saving builds confidence and character.
ABOUT SAM X RENICK
Sam X Renick is the driving force behind Sammy Rabbit, Sammy's Dream Big Vision and the "It's a Habit" Company. Sam and Sammy are dedicated to empowering kids’ dreams and improving their financial literacy through the development of great habits and strategic life skills. Sam has read and sung off key with over a quarter million children around the world, encouraging them to get in the habits of saving money and reading! He has won numerous honors throughout his career including the New Jersey Coalition for Financial Education's Lifetime Achievement Award!