7 minute read
Hello, beautiful people from across the lands! Now more than ever financial education should be a priority in every household. It is important to begin to teach children about money early. COVID has forced many parents to become teachers involuntarily I might add. Although in many ways this has been a stressor it is a golden opportunity to teach kids about money lessons they will not get in school. In this post, I discuss 4 basic money lessons you can start with your child today.
Give
Oftentimes especially with children money may be seen as something they can get with no awareness on how to give. I have adopted the 10% rule that is often associated with tithing in church. It is a simple principle that can be easily explained when you teach kids about money. Allow them to choose in what ways they would like to give. Empower them to make decisions with every cent that comes their way.
Save
Saving is something that is essential in anyone’s money journey, even a child. Teaching them to practice delayed gratification and self-discipline is key in financial freedom. Maybe there is a toy or gadget they want they could save up for. I am in favor of opening a high yielding savings account vs regular savings due to higher interest. Developing the skill to grow your money versus spending it impulsively goes a long way.
Spend
Spending is not a bad thing when done within a budget and self-control. Encouraging the understanding that money is a tool that can provide various gain when done the right way. Give and save were purposely put first for a reason. Money should be handled by priority which helps develop discipline. After the priorities are taken care and there is money left over they are free to spend or invest as they please. Which leads me to the last and most important lesson.
Invest
The first three are common concepts many of us understand and may be able to teach with ease but investing is something that children need to learn and implement as well. Investing teaches the most valuable lesson of all, having money work for itself. Often we focus on the linear ways to make money which is connected to our time. Passive income is a powerful tool that shifts you from living to thriving. It’s important to teach our kids this valuable lesson. Here are some investing tools you can begin to teach your child to invest in today.
College 529 Plan
America currently has 1.6 TRILLION in student loan debt. My 90K is a part of that number sadly but not forever! Opening a College 592 Plan can help set your child up for financial success academically. The earlier the better. For birthdays family and friends can make deposits into the account to build their value. This is a simple way to start the investing journey. Check out this podcast from His and Her Money that goes into depth about 529’s and how to open one up.
Custodial Account
This is a fairly new account I am learning and eventually will work with the kiddos to open one up. I came across the cutest Youtube from Our Rich Journey where their daughters 11 & 13 shared how they made $16,000! I wanted to hire them as my financial advisors by the end of the video! A custodial account is another wealth-building tool. It’s essentially a savings account connected to a financial institution, mutual fund company, or brokerage firm that is monitored by the adult until the child turns 18 or 21. The age depends upon the state regulations. Be sure to check out the video to learn more.
Conclusion
Starting the money conversation early will set your child up for success ending the cycle of poverty and paycheck to paycheck living. I hope these four lessons make it easy to teach kids about money. The impact these four money lessons can have on children will last generations.
Give: Teachings the skill of generosity and gratitude
Save: Teaches the skill of delayed gratification and self discipline
Spend: Teaches the skill of priorities needs and spending responsibility
Invest: Teaches the skill of wealth building and passive income
How do you plan on implementing these lessons in your household? Have you started the money conversations with your children already, what strategies are you using? Let’s build our legacy one child and lesson at a time.
Until next time dream, believe, and achieve.
