One of the direct results of my time working as an accountant was the realization that money habits, good or bad, start young. It didn't take long, after I brought a sweet bundle-of-joy home for the first time, for me to start planning her financial education. I wanted her to see money as a tool, something to use carefully and appreciate. I hoped to teach her to avoid financial pitfalls that would cause stress, misery and tension.
So, what do small children already know about money? While watching my little ones, I've learned that:
- Coins are much more desirable than the green paper things.
- Pennies are clearly better than dimes because they are bigger.
- Credit cards pay for things for free.
- If we don't have something, we can just go buy it.
- If I have a coin in my pocket, I should go buy gum.
It was after hearing and observing things from my children that I came up with the four things I really needed my kids to know about money. They are:
1. How to Earn It:
We throw around the saying, "Money doesn't grow on trees," but do your kids know where your money really comes from? Do they think it comes from the store or the bank as mine have been known to respond? Children need to know that money comes from work. They need to know that if daddy or mommy don't work, there isn't money for toys, clothes and supper. They need to know if they dump all the shampoo out in the tub, someone has to work before there is money to buy more. They need to experience working for money. While free chores are required daily at our house, we also make sure our children have paid chore opportunities so they can experience the work-for-money principle themselves.
2. How to Save It:
It seems that every time my kids have money in their pocket, they want to spend it. At first, I would suggest saving for college and a car. As it turned out, they weren't highly motivated by something that distant in the future. I changed strategies and brought up the Lalaloopsy doll they wanted so badly. This was much more effective. We looked up how much the doll cost, and they realized if they didn't start saving some money, they would never be able to afford her. Suddenly, we were talking about, "If I do money chores every day, and save half of it, how long will it take me to buy my doll?" Dolls are just the beginning. By saving 50% of their earnings, my kids are developing critical saving habits that will grow with them and their paychecks.
3. How to Spend It:
When my children ask me to buy an expensive toy or take them out to their favorite restaurant on a weeknight, I avoid saying, "We can't afford that." That phrase isn't true. I could buy that toy, and we could go out for dinner each night. The result of those choices would be that we would have less money for our house, gymnastics lessons and the electric bill. It's important for kids to know that just because they have money, doesn't mean they can spend it on whatever they want. Instead, they should think about what they need first, and then buy what they really want after that. Our children are not at an age where we require them to pay for any of their needs, so they are left with their wants for now. To help them choose what they want most, I ask them to think about a couple of things they might want to buy before we leave home. This way, they aren't just wandering through the aisles, looking for the brightest wrapper and impulse buying whatever they see.
4. How to Share It:
One of the most fulfilling things you can do with money is share it. I encourage my children to give away 10% of their income, even at this young age, because it allows them to feel the joy of giving and to see the impact it can have on someone in need. They experienced this beautifully a few weeks before Christmas last year. My children decided to participate in an art supplies drive for a nearby children's hospital. I took them to the store so they could personally select the perfect items to donate. They were so excited, and couldn't wait to hand over their selections. About two weeks later, my 7-month-old baby became extremely ill, and life-flight was called to take her to the same children's hospital. I left my older children at home, and spent the days before Christmas in the hospital with my baby. As I paid a brief visit to the Ronald McDonald house one afternoon during my stay, I saw art supplies sitting on a small table for the children to play with. The sight brought me to tears. My baby was released on Christmas Eve, and when I brought her in the door, I told my children about this experience. They learned that you never can tell when you will be the one in need.
Money is an amazing thing. It can buy food and amazing vacations. It keeps the lights on and the dishwasher running. Sadly, it can also keep you up at night with worry and stress I may not be able to solve all of my children's future financial burdens, but I do hope to give them a head start by teaching them how to earn, save, spend, and share their money wisely.
The photography for this post was generously provided by Poppies & Posies Photography.