I love my children. I have five of them after all. I look forward to spending time with them as they become adults. I want to hear about their lives, their successes, their failures, their joys and their sorrows. I want to know their friends. I want to go out to dinner with them and spend time with them. I want to vacation with them. I want them to come visit me.
But, I don’t want them living with me when they are adults.
Here are 5 things about money I’m trying to teach my children now to help empower them on their path to becoming successful adults (who are really fun to hang out with even when I’m not supporting them!)
- EARN it
Work is its own reward. As much as I dream about sitting by the pool, lounging on the couch, and having time to do nothing, my observation is that children (& adults) are happier when they are engaged in something productive. There is a mental “lift” when you work hard and can see the fruits of your labor. The good news is that you can get paid for good, hard work. And jobs for children exist even at young ages. My kids have been “working” since elementary school: pet sitting, doing yard work, picking up acorns, washing out trash cans, etc. As children become teenagers, job opportunities increase: lifeguarding, babysitting, working in retail & restaurants, refereeing and umpiring for community sports, helping parents chauffeur their children to after-school activities, etc. By the time they become adults, besides having a work ethic; they also know how good it feels to have a dollar in their pocket. And they are more inclined to spend it wisely when it’s a dollar they have earned themselves.
- GIVE it AWAY
Each time one of my children earned money, we sat down to talk about what to do with it. First on the list was charity. I believe that if you can learn early how to look out for others, you will appreciate the blessings in your own life more. In our family, my kids have a mandatory 10% allocation to charity. We give it to our church, but there are many charities out there and many worthwhile causes. Find one that means something to you and your children.
- SAVE it
Second on our list of what to do with earned income: Save it. My children direct 20% of their income to savings. As soon as they started earning money, we set up a savings account for each of them. When their paychecks began coming from companies, we set up a checking account for them. With mobile deposits and online banking, my kids can give me 20% of their earnings, and I can deposit it into their savings accounts. When they have their own checking accounts, they can deposit their check and transfer the money themselves from their checking account to their savings account. As their savings account balances increase, we have even opened up Roth IRAs for our teenagers to start them on the path to long term savings.
- SPEND it
Once my children have paid their tithing and put money into their savings accounts, the rest is theirs to spend how and when they want. It is good to understand how to spend and to feel the joy (& motivation) of wanting/needing money to do so. And I have spenders and savers. Some of my children want to keep saving their spending money and are hard pressed to use their own money for anything. Others have money burning a hole in their pocket and already know what they want to buy before the money even comes in. And that’s ok. As long as they have paid their obligations first (tithing and savings), they can spend what they want. The point is to teach them to cover their obligations first.
- OWN it
As my children leave our home and go to college, I know they will be offered credit cards to start building their credit. Credit cards are an important and effective tool for financial management. But my goal is to teach my children the dangers of credit cards. Using a credit card is convenient and useful when tracking expenses, but if that card balance doesn’t get paid off immediately, it becomes a handcuff. Credit cards MUST be paid in full each month. If that’s not possible, then cash is the only way to pay for something.
My oldest has now left the nest. He’s had years of earning money and allocating his resources. It’s my hope that in this one area of his life, he grasps and understands the value of making wise financial choices. If past experience is any teacher, I think he’ll be OK. I only have four more to go!