Teaching kids about money and finances needs to be a priority for Dads and our schools too.
As fathers, we have lots to worry about when it comes to our kids. Their health, education and well being all move to the front of our minds at a hurried pace as we navigate the journey of fatherhood.
Flickr: AlaksaTeacher
One area that many American fathers (and mothers!) fail to focus on is money. I don’t mean saving for your child’s education or providing a good home with a good job and a good paycheck, I am talking about teaching our kids about money.
In a recent survey conducted by ING Direct bank, two out of five parents rather talk to their kids about the nerve-racking dangers of drugs and alcohol than talk about money. Furthermore, three out of 10 rather talk to their kids about sex.
The results further underscore what most of us already know: talking about money with our kids is one of the last taboos of parenthood.
But why is this the case?
The answer is probably one most parents don’t want to admit. The fact is most Americans don’t know how to really manage their money and get the most from it. A majority of us aren’t very good at it and who wants to talk to their kids about a subject that perplexes them? We all hate to fail and to admit, in front of our kids, that we don’t know it all.
Like so many of the ills that face our society today, much of the blame lies at home and in our educational system.
At home, we’re just not great at it ourselves so our kids suffer. Chances are if you’re like me, your parents weren’t great at it either. It’s a self-perpetuating weakness bred into us. Unless many of us take an interest on our own, we eventually make the same mistakes our parents made and, in turn, show our kids how to make those mistakes too.
In our schools, personal finance education is non-existent. Sure, some kids learn about counting money but they don’t learn how to save it, budget it and spend it wisely in the classroom. We have time to teach our kids about the environment and even the world’s religions but we don’t have time to teach them how to build a better financial future?
Flickr - Lucias_Clay
Although not based on any fancy-schmancy survey, my opinion is this is why we’ve seen the biggest recession since the Great Depression. Americans spend too much, save too little and are caught up in a consumer culture that ends in 78 year olds having to work at Wal-Mart just to pay for their medication. I am all for keeping our experienced senior citizens in the workplace, but not because they have to.
I don’t have any magic potion but the answer starts at home. As father’s we have to do a better job of teaching our kids about money. We have the opportunity to teach them every day but fail to do so. Let’s get off our duff and start doing it more.
For me, I’ve taken the hard lessons I’ve learned (especially as a young man) and begun to use them with my older kids. I talk to them all the time about money and what it enables us to do in life and what it doesn’t do for us as well. I talk to them about bills, debt, budgets and even investments.
I still have a long way to go. I need to do more and it’s something I am committed to doing. I want them to face the world ahead with enough knowledge to allow them to make good decisions about their money, as they get older.
Here are a couple of tips and actions I’ve taken, perhaps they’ll help you:
- Open a savings account. Sounds like a pretty standard thing for a parent to do but you’d be surprised at how many don’t do it. Savings accounts aren’t just a place for your kids to deposit that piggy bank money, they teach many other important lessons your kids must know. My kids have accounts at Bank of America, but all major banks and local banks have similar programs.
- Open an investment account. No, not that 529 plan you’re saving to send your youngster to Notre Dame or Harvard. I mean an actual investment account to show them how to buy, sell and trade. The best place I’ve found is Sharebuilder.com. Owned by ING, Sharebuilder allows you to automatically invest for your kids by buying fractional stocks, bonds and ETFs. My kids love following their Disney and Coca-Cola stocks and now understand how the market works.
- The 70-20-10 rule. In our house, I teach my kids an important lesson every time they get money. I require them to keep 70 percent for purchases or items they need or want, put 20 percent away in savings, and take the final 10 percent and donate it. In our case, the kids donate to our local church or to another cause. This teaches them to live on less, save more and give back to their community.
- Teach the basics of budgeting. Full disclosure: I work for Intuit, which owns the Quicken brand of online money management and desktop software. That aside, my kids have all of their accounts linked into the free Quicken Online where they can see all of their accounts in one place. This allows them to see a complete financial picture and helps them create a budget. Another great option is Mint.com, which is also free
We owe it to our kids to set them on the right financial path. Don’t be discouraged if you aren’t the best at it yet. You can learn together and create a better financial future for you and your family.
Follow Scott on Twitter @prgully or email him at scott@everyotherthursday.com. Just don’t bitch because he has a very strong pimp hand.
Scott, this is great advice and is dead on. I think most parents don’t have the financial discussion with their kids because it means they have to admit that they’re terrible at managing their own finances. I also blame the instant gratification culture that kids — and sadly some adults — get sucked into. The bottom line is that while it has been bred into people, you can’t spend all of the time. There are plenty of free ways to entertain your kids and self without bankrupting yourself to play keeping up with the Jones’s.
You guys are spot on with this. I talk to my five year old about money, but she’s more about recognizing what it is and how much she’s raking in. Yes, we have a piggy bank, but at this point the conversation is about what she can guy for five bucks more so than what that five will turn into if she puts it in the bank (pretty much just five bucks).