How do you teach your child about money? As a dad, it’s part of my responsibility to get them good with money as early as possible. Not only will this help them, but will help me by having financially independent grownup children. In this article, I want to share lessons that I am teaching my kids that may help you navigate this subject with your children.
Understand, my method is a bit unconventional. I want my kids to understand money the way they’ll use money as an adult. I talk to them with words they understand often using emotive phrases. The article How to Talk to Your Kids About Money by a Teacher shares the importance of using emotion to convey a lesson. That’s a good read.
Also, I recommend reading a very simple book called, Why Didn’t They Teach Me This in School (amazon link). It’s simple. Straight to the point. Easily digestible. Practical.
But, I want to add my own set of rules I teach my child about money.
1. Don’t waste your money on stupid things
Be intentional about your purchases no matter how small they are. Many little stupid purchases will equal a huge stupid purchase. Don’t fall into the trap of “is a good deal” or “I might need it in the future” just buy what you need. I don’t mean for you to hoard money. Focus on saving money to afford things that bring comfort, value, and joy. Buy good things, not stupid things with your money.
Read Spend on Loves, Not Likes.
2. It might sound drastic but you need to understand that you’re in battle
Since the day you were conceived advertisers, telemarketers, companies big and small are competing for your parent’s money and your money. Advertising is not generally a bad thing because that’s how companies reach buyers and make a profit. Be aware of the marketing tactics and don’t fall into their traps. Doing so, you’ll end with less money, more things, and broke. Be strong-minded and remember that you are fighting to KEEP as much money in your pocket and they are fighting to TAKE as much money from your pocket.
3. Learn how to cook
Invest time in finding out how to prepare fast, tasty, and healthy meals for yourself. You will save thousands of dollars yearly and your body will thank you. Also, learn to make your own coffee/tea. Way too much money is wasted at coffeehouses that add up to a sizeable amount.
4. Look good without spending a fortune
You can drive a nice car without spending a fortune and going into unnecessary debt. I think most of us can agree that having luxury items to ride and wear can be really nice. The problem is that it can lead you to a life of brokenness, living paycheck-to-paycheck and lots of debt. Often spending a fortune you don’t have results in massive financial stress for you and your family. Financial troubles can make you hate an otherwise good life and can trap you into working a job you hate. Be simple and stay humble. Buy a car you can afford. Buy clothes you feel comfortable wearing, and won’t spend your paycheck.
5. If it ain’t broken don’t fix it or change it
Focus on maintaining what you already have. Don’t spend because you’re tired of the same old thing. I see too many people replacing their smartphones, TVs, washing machines, tools, furniture, and their car just because they want something new. A lifestyle of always having the best and latest gadgets will keep you broke. See those ads for the new smartphone hitting the market? It has the same parts and features as the old phone but in a new color. Don’t do it. Be Wise.
6. Keep your monthly expenses to a minimum
The fewer things you have to pay at the end of the month, the more you have for yourself. If you rarely watch shows then don’t pay for cable or streaming services. And if you get a service and stop using it, cancel it immediately. The same thing goes for any monthly subscriptions that aren’t used, cancel them. They have a tendency of creeping up. Know where your money is going monthly. Take control of where you want your dollar to go. Have a practice of auditing expenses to cut out the unnecessary costs.
Read this article to lower your monthly expenses.
7. Know your reasons
Money is a tool. Know why you need it and how to use it properly. And you need to go deeper and know the reasons and the purpose of saving money. Understand why you are sacrificing “luxuries” and “feel good” shopping for long-term goals. Without knowing your “whys”, it gets more challenging to follow these simple things. Ask yourself questions: do I want more freedom? do I want to work in a place I enjoy?
I want to be clear. This is not about being cheap. It’s about being frugal. That means saving money when it counts and spending when it matters. As Jason, the founder at phroogal, wrote in his book You Only Live Once, “we earn money to spend money, and how we spend money matters to the quality of life we live.” I believe if we teach kids early about money they’ll develop a better relationship with it. That’s a win in my book. My kids get to live their best life sooner than me. And I don’t have to worry about supporting them financially as an adult.
These are the things I’m teaching my child about money. What lessons are you teaching your kids?