Money Education—Start Young
- Consider teaching children about the value of money sooner rather than later.
- Thanks to the Internet and social media, kids are exposed to money issues at a much younger age than we were.
- The Savvy piggy bank—with four compartments—can help kids allocate money for saving, spending, investing and giving. See our earlier posts about the Savvy piggy bank.
***Don’t miss our annual Spring Cleaning Barbecue on May 16th. Shred old documents, recycle old electronics.
A friend recently confided that her daughter wanted to know whether their family is rich. When my friend asked her daughter why she wanted to know, the girl replied, “Well, I typed our address into Google, and it said our house was worth this much money. Then, I typed my friend’s address in, and it said it was worth a lot less. So, I thought maybe we’re rich.” What do you think?
If you type your address into Google, you’ll find a plethora of information about the value of your house from Zillow and other sources. Thanks to the Internet, kids are exposed to streams of information about money and wealth at a much younger age than we were. You might as well teach them the real facts about money and wealth before they get this information from somewhere else. Here’s how.
Making money discussions real
Suppose you make $5,000 a month. Go down to your bank and ask for 5,000 one-dollar bills, or even better, 500 ten-dollar bills in stacks of 50 each. Bring the bills home and show your kids what happens to this huge stack of money over the course of a typical month.
Take the first $500 in bills off the table and tell them that you need to save 10 percent for retirement every month. That should get their attention. Next, take out $1,000 in bills and tell them you need that stack to cover Social Security, federal taxes and state taxes. Then remind them about the mortgage—the big loan that enabled you to buy the house in which you live—$1,200 a month. So that’s two more stacks and another 20 ten-dollar bills. Bam, set those aside. Then start peeling away bills for your living expenses, and pretty soon you’re down to a very small stack of bills left at the end of the month.
Your kids might say something like, “Gee, I wanted to buy some LEGOs, but there’s not a lot of money there for that.” Hopefully they’ll start to make some valuations about the real value of money. It’s very tangible now, thanks to using real bills.
In earlier posts I’ve mentioned the “Savvy piggy bank,” which has separate compartments for the four basics of money—saving, spending, investing and giving. You want kids to understand the value of money both intrinsically and extrinsically and to develop good money habits.
Speaking of good habits, our annual Spring Cleaning Barbecue is coming up on May 16 (10 a.m. to 2 p.m.) right here in our parking lot. You can shred old documents, recycle electronics, donate old clothes and then eat great food and listen to music. I’m sure you’ll enjoy it.
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