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Thread: "Finance Experts" Tips on Teaching your Children Financial Independence!

  1. #1
    Luv Saving People Money MortgageQueen's Avatar
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    Awesome article based on Money Experts tips they use on their own kids. . . I am a HUGE supporter of teaching children the value of money, debt, and saving. This is only because I see soooo many adults who don't have a clue how to manage money. Don't let your kids be the next generation of Canadians who are now deeply in debt with no savings.
    MortgageQueen






    8 Ways to Teach Your Kids to Be Financially Independent



    July 1, 2014

    When it comes to money management, your child can't do this alone.Laurence Dutton—Getty ImagesWant your children to develop good money habits for life? Then teach them well from the start. Use these tips from parents and top personal finance experts as your lesson plan.

    Show Them That Work is Rewarding

    To help your kids master essential money skills—and some day break free from you—devote time to financial home schooling. Parents are the biggest influence on their children’s financial habits, more so than work experience or financial literacy courses, according to the National Endowment for Financial Education. For ideas on how to do this, see how personal finance and parenting bloggers and authors teach their kids.

    “From the time our children were three or four years old, we’ve given them opportunities to earn money by doing chores and projects. When we’re out shopping, they can bring their own money and spend it however they’d like (within reason!). Not only do they learn money management skills, but this helps prevent the ‘gimme’ attitude. If a child sees something they want and asks if we can buy it, I always respond, ‘Do you have enough money for it?’ It also gives them the chance to make money mistakes. They’ve learned valuable lessons when they’ve purchased cheap items that broke almost immediately, and we’ve had great discussions on how to make wise purchases. We’d much rather they made $3 mistakes when they are little to hopefully prevent some $3,000 and $30,000 mistakes down the road.” — Crystal Paine, MoneySavingMom, author of Say Goodbye to Survival Mode?

    1. Tie a “No” Today to a “Yes” Tomorrow 2. Let Them Make Spending Mistakes

    “My wife and I have three children, ages 6, 4, and 2. While they are still a little young for in-depth money lessons, we make a point to involve them in family finances and try to make talking about financial responsibility and independence a part of our daily life. This usually happens in a thousand little, ordinary ways. An instance that comes to mind is when my four-year-old son asked if we could go to a local pizza and games restaurant that he loves. I said no, but went on to explain to him that it costs a lot of money for our family to enjoy an evening there. I reminded him of our vacation in a few months and said we were saving up so that we can have a lot of fun on our trip. It was a good way to teach him about the important principle of delayed gratification and the lesson that sometimes you have to say ‘no’ to things you want now, to enjoy better things in the future.” —John Schmoll, Jr., Frugal Rules

    “’I get an M&M mama?’ my talkative toddler asks. I reply, ‘Yes, if you complete the job.’ Even at 2 1/2 years old, I’m attempting to lay financial foundations in my son’s life. At this age, he doesn’t care a thing in the world about real money, but when I break out the M&Ms he knows I mean business. That’s because chocolate is a special treat reserved for a reward. At this stage, candy talks, and I can teach my son about finances with food. He is learning that when he uses the potty, picks up after himself, or helps me with a chore, he is paid for his work in delicious, color-coated chocolate candies. He’s beginning to understand that hard work is rewarded. That’s a trait my parents instilled in me, and I desire to pass along. Cash and chore charts will eventually replace sweets, but until then, candy paychecks are perfectly fine by him. Coins just don’t taste as good.” — Kim Anderson, Thrifty Little Mom

    Break Out the 24-Hour Rule

    “I’m blown away that my teenage daughter still remembers going to the flea market together years ago and learning a cool buying lesson from her mom. (As all us moms know, this is a rare and exotic occurrence!) Though I liked a pair of earrings, I waited a day to think it over, knowing that they would likely still be there if I changed my mind. Sure enough, after a day of thinking about it, I realized they weren’t all that special and that I’d rather wait to get something that I loved. To this day, whenever my daughter and I are out shopping and can’t make a decision, we invoke the ’24 Hour Rule.’” —Beth Kobliner, author of the forthcoming book Make Your Kid a Money Genius (Even If You’re Not) and a member of the President’s Advisory Council on Financial Capability for Young Americans.

    Connect Saving, Spending, and Giving From the Outset

    “My wife and I have a four-year-old son, and we’re just now beginning to teach him the true value of money and how it is a tool to be used for different purposes. We’re doing that through the use of three money jars. When he earns money through little jobs we have given him, depending on the day he will put the money in one of three jars. One day for giving, one for saving, and one for spending. On the last day of the week he can choose which jar to put his money in. He can never buy anything unless he has the money available in the spending jar. He also sees importance of saving for the future, and the joy of giving to others. It’s truly a joy to see when the ideas of giving and saving start to register, and it’s so fun to see the smile on his little face when he’s giving to our church, or to a friend through his giving jar. — Peter Anderson, Bible Money Matters


    “Our kids are still very young, but at ages 3, 5, and 6 we’re doing our best to teach them the importance of spending, saving, and giving. Last summer, we made piggy banks as a family, and each child has three in their bedroom. One for saving, one for spending, and one for donating. Anytime they make money at a lemonade stand or receive birthday money, they split it up equally among their three jars. It’s not a huge act, but it does start the process at a young age that it’s okay to spend some of your money, as long as you’re giving back to others and saving as well.” — Anna Luther, My Life and Kids


    Show Them the Price—and the Path

    “We have young kids, but we’ve started occasionally working with our five-year-old daughter, Kate. One day while shopping with us she discovered My Little Ponies and asked if she could have one. We explained that we were planning on using our money for other things right now (a phrase we prefer to ‘we can’t afford it’). We shared with her that we would love to help her earn the money to buy it herself. We told her to write down the price and start saving money for it. Over the next couple of weeks we gave her little odd jobs to do around the house to earn the money, quarters and dimes at a time. She worked hard until she’d saved enough. Then we went to the store, and she got to buy her pony. She was so proud. It was a great lesson in money math, delayed gratification, and the power of saving.” — Philip Taylor, PT Money

    Talk About Debt, Too

    “My two boys aren’t quite old enough for serious money lessons yet, but one thing I’m excited to teach them early on is the importance of smartly managing debt. If they want to buy something on their own, like a toy, they’ll have three choices: 1) Buy it now, 2) Save to buy it later, or 3) Borrow money from us. If they choose to borrow, they’ll have payment terms and interest just like a regular loan. My hope is that they can learn the consequences of debt, both good and bad, before it has any real-world implications for them and without the lectures and scare tactics. Then they’ll have the skills and experience to make smarter choices once they’re out on their own.” — Matt Becker, Mom and Dad Money


    Make Them Work for Wants


    “A key factor in reaching financial independence is what you spend. Some spending is needed and necessary. But it’s the ‘wants’ that can get people in trouble. Therefore, when our kids ask for a non-essential item, we reply with a two-step plan: 1. First, wait a week. If you still want it, we’ll get it then (most times the ‘want’ goes away by the end of the first day); 2. If you still want it after the week passes, you have to work around the house to earn half of the purchase price—even if you have enough in savings to pay for it. The second step forces them to think if the amount of work required to purchase the item is worth it to them. If they follow through with the required work, then we know that they’re serious about the purchase, rather than just expressing a fleeting, short-term desire.Several times the “acquiring of money to pay for the thing” becomes almost exciting as the actual purchase.” — Kevin McKinley, On Your Money




    http://time.com/money/2946458/teach-...y-independent/
    This thread is currently associated with: Independent, M&M Meats
    Last edited by MortgageQueen; Tue, Jul 15th, 2014 at 11:00 PM.


  2. #2
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    Great article & I LOVE the photo!! Super cute!!
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    That is awedome. Lots of parents should read this it will help them a great deals. I agree for the next generation. They want everything and now. I dont know how the world will be wen no one wants to work but want everything at the same time.

    Thank you for sharing MortgageQueen, that is great info......................................
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    Great post, MQ. Our DD, being a Financial Planner, is well aware of the benefits of savings, so of course, their little guy has a piggy bank that he's always eager to add to. A few weeks ago, he wanted our DD to purchase something for him....you have money, she says....you can use your own. Okay, he said, went to his room, and emptied some of his money onto his bed. She then counted out the amount of money he'd need to buy his little item. He stood there.....weighed his options, and then decided that "nah", he really didn't want it that much. Then she went on to explain, in 5-year old terms, the value of making smart choices, the value of money, and saving (he may want something better later, and he'd have the money to buy it). He hasn't touched his money to this day, even when told he could afford to purchase a toy himself.
    Great teaching opportunities in that article! It's too funny...they've also,used the "M&M" technique for chores...lol...
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    I may have mentioned this, here, somewhere before but we have a 10 year old grandson. Since he was 5 we have given him an allowance. We have taught him that he can do 4 things with his money. He can spend it, save it, invest it and donate it. At this time he gets $8.00 a week....$3 for spending, $3 for saving, $1 for investing, and $1 for donation.

    When he first started, his spending money ended up at the dollar store buying junk. After a while he became much more selective about what he spent his spending money on. His first "big ticket" item bought from the savings jar was a $20 fire truck. At the end of each month Grandma pays him 5% of whatever is sitting in his investing jar. (Grandpa says he wants some of that action because he can't get 5% anywhere. lol) When it comes to donations, every few months he likes to take his donation money to buy dog and cat food for the humane society.

    Financially, we have watched this little kid grow over the past 5 years. He negotiates at yard sales and looks things over before he buys them. At the church baazar he asked me if he could spend $8 of the $10 in his pocket on a homemade pumpkin pie. I told him it was his spending money so he could spend it on whatever he wanted. He asked the ladies at the bake table to hold it for a few minutes while he scouted the room to see if there was anything else he wanted more. After checking out the room twice, he went back to buy the pie and was thrilled with the purchase that he was taking home to share with his Mom and Dad and little sister. When we take his donations to the humane society, he takes his digital camera and takes photos of the animals so he has really enjoyed the outing there.

    Hopefully, by investing the time in these lessons, he will end up with good money management skills.
    Last edited by Retiree; Sun, Jul 27th, 2014 at 02:49 PM.

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    Your grandson sounds like a fine young man in the making, Retiree.
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    Thanks, I'll have to check it out later.
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    I can't take credit for the financial lessons, Mortgage Queen. I saw a woman on TV who talked about going into the schools in the US to teach kids about these 4 things they could do with their money. I was so impressed with her presentation that I thought it was worth a try and it certainly seems to have been helpful to our granson.
    Last edited by Retiree; Mon, Jul 28th, 2014 at 09:24 AM.
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    This is what we are going for! :D we want to prepare children with strong financial strategies not commonly taught in schools and develop habits to prevent poor financial decisions at an impressionable age.

    Wonderful article. Thank you!

    Chris - (theseedcoway.com)
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    Bean bun going offline Ciel's Avatar
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    January article about getting children interested in money (and columnist writes that children need their own money but not for doing chores, which are about helping out at home).
    http://www.thestar.com/business/pers...out-money.html
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    Senior Canuck matty's mom's Avatar
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    Quote Originally Posted by Ciel View Post
    January article about getting children interested in money (and columnist writes that children need their own money but not for doing chores, which are about helping out at home).
    http://www.thestar.com/business/pers...out-money.html
    You know, I kind of agree with this idea of not tying chores to allowance. Most jobs are team oriented. If DS decides to work in a corporation, he will need to be a team player. If he decides to become a doctor, he needs to know how to effectively learn to deal with the team of other doctors/ nurses/ techs etc for the sake of the patient. Most creative fields are team oriented. DH worked with a team of carpenters, plumbers etc. Sometimes, for the sake of the team, you might need to do something that you don't get rewarded (paid) for doing. Thinking of this, we have given DS a list of the responsibilities to the family. He also gets an allowance every week of $3. ( He is six). We have not tied the chores to the allowance. Instead, if he doesn't do his part, there are other consequences.

    We have, however, given him a small chore list that he can earn money. He can vacuum the floors, wash and fold his laundry (did this last weekend), and a couple of other things. So he does understands earn and pay. He is learning to see money as a tool.
    Last edited by matty's mom; Fri, Jan 15th, 2016 at 07:56 AM.
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    Quote Originally Posted by matty's mom View Post
    You know, I kind of agree with this idea of not tying chores to allowance. Most jobs are team oriented. If DS decides to work in a corporation, he will need to be a team player. If he decides to become a doctor, he needs to know how to effectively learn to deal with the team of other doctors/ nurses/ techs etc for the sake of the patient. Most creative fields are team oriented. DH worked with a team of carpenters, plumbers etc. Sometimes, for the sake of the team, you might need to do something that you don't get rewarded (paid) for doing. Thinking of this, we have given DS a list of the responsibilities to the family. He also gets an allowance every week of $3. ( He is six). We have not tied the chores to the allowance. Instead, if he doesn't do his part, there are other consequences.

    We have, however, given him a small chore list that he can earn money. He can vacuum the floors, wash and fold his laundry (did this last weekend), and a couple of other things. So he does understands earn and pay. He is learning to see money as a tool.
    He's 6 and he can wash and fold laundry??! Matty's mom - YOU ROCK!!
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    Senior Canuck matty's mom's Avatar
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    Quote Originally Posted by MortgageQueen View Post
    He's 6 and he can wash and fold laundry??! Matty's mom - YOU ROCK!!
    Well... Folding is more like "folding" . But thanks, he is learning. He is working on folding his t-shirts so they don't wrinkle, but yes, he is learning. And, I take care of anything needing spray help or bleach. I don't want him dealing them.
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    I think it's highly important to teach kids about the money! It's important to explain how to manage money wisely, moreover, there are many games that help understand the money basics. For example, Monopoly! There are simple tips to become wealthy and it's quite easy to explain them to kids! I'm sure that I'll do my best to raise financially literate children.

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