Teach The Next Generation About Personal Finance

The Next Generation Of Savers

When I started this BLOG it was about helping others build good habits and teach them about personal finance. Over the last few weeks, it became evident that the most important area I have over looked is teaching the next generation about personal finance. 

Did you know that only 1% of parents surveyed by the American Institute of CPAs say their kids set aside any money? 

How do we expect them to be successful and instill lifelong habits if we don’t teach them. Remember it is important to start young.  Just like you did when you learned to ride a bike or tie your shoes – loop, swoop and pull !This BLOG will evolve over the next few weeks.

Below is the first installment about teaching the next generation about personal finance.

The Next Generation: Teach Them How To Save

This has been a painful experience. It is right up there with teaching our children about taxes (yes, the item for $9.99 really costs $10.50) and one that we have to continually work at. Today, we do a few different things to help them build habits. I started with a minimum they must keep in their accounts at all times and each year we raise the minimum (e.g. $50 or $100). We also talk to them about saving money. I also plan to have them start using Acorns as a way to save each month together! It’s important they see their money grow. I will keep you posted on progress!

The Next Generation: Let Them Make Purchases

Giving kids an allowance is a good idea (more below.  It is also important to teach them how it feels to buy something. How do save for it, the experience of purchasing.  When we go on a trip or to the movies, I let them know they will be responsible for their own souvenirs or snacks. Not only does it help cut down on the constant nagging, but more importantly it makes them think carefully about how they spend their money and teaches them about opportunity cost. It has taught them to spend smart and the importance of choices. 

The Next Generation: Get Them Involved In Financial Decisions

This is an area that has been amazing to watch. As a parent, I had a habit of simply going to the store or eating dinner at a restaurant, paying the bill. I just cursed under my breath on how expensive it had gotten. Never did I take the time to explain it or share it with our children. Involve your kids in the decision. Now we spend time to teach them the value of money, how to budget and how we chose to spend it. At a recent trip we talked about eating a simple breakfast vs the eggs Benedict (yes this happened) and it saved us $25 as a family on one meal! What a simple yet effective change.

The Next Generation: Earn A Commission, Not An Allowance

Instead of a flat rate each week we have made them earn it. They each have a set chore, which they earn a commission on. If they do it they earn the money, if they don’t then the money stays with us. It teaches them to understand that money is earned, not just handed out or given to them. Be consistent and follow thru! 

The Next Generation: Teach Them About Investing

When you have money, it’s important to make it work for you.  Remember, most rich people are investors, not spenders ! While this may sound complicated, it really isn’t. This is one I am just starting with. Teaching them about stocks and the stock market is a great way to spend time together.  Ask them to look at companies they like and companies (or products) they are interested in. Buying a single share and letting them watch it grow can be very rewarding – dividends, earnings, etc. Investing is a great way to get them involved and also educated at the same time. This was our family dinner conversation this past weekend !

Remember that life is a game never won or lost, only played.