Teaching Children About Money and Finance

February 14, 2011

By Joe Buhrmann

As my daughters are nearing the end of high school, I’m remembering moments in which we had a chance to influence lives forever. I thought I’d share some of those invaluable lessons.

It’s Never Too Early to Start
When our children were young, we provided allowances along with envelopes labeled Spend, Short Term and Long Term. Their coins, and later on dollars, were divided equally among the envelopes. Our kids were able to have money in their pockets and learn how to save for a rainy day.

Teach Spending as Well as Saving
We all know it’s important to teach kids to save, but it’s equally important to learn how to spend. Teach your children to recognize a true bargain from one that is not, how to compare brands and make sound purchasing decisions. There may not always be money to invest, but good shopping skills will always help stretch a dollar a little farther.

Skin in the Game
I’m a big believer that you’re generally more engaged in something where you have some “skin in the game.” For my youngest, it means baby-sitting and pet-sitting to earn money for the usual teen necessities – clothes and music downloads – as well longer-term goals such as a car and college.

As an equestrian, our oldest took to heart my motto: “It’s not called the sport of kings for nothing.” With two competition horses and plenty of bills, she cleans stalls and feeds horses to pay the monthly board.
We have always instilled a love of learning and the value of a quality education. When it came time to visit college campuses, my oldest discovered scholarships might be within her grasp and schools might actually pay her to attend. She said, “Dad, could this be my skin in the game with good grades and scholarships?” Mission accomplished.

Reward Behavior You Want to Encourage
Last spring, my youngest was learning all about different kinds of investments, including Certificates of Deposit. We told her that if she saved half the money for the CD, we’d match it. In short order, she proudly watched her funds grow.

If It’s Going to Be, It’s Up to Me
Take personal and parental responsibility. Many schools have excellent programs available, so be sure to take advantage of them. My daughters have each taken a personal finance class. They learned the difference between a stock and a bond, what a mutual fund is, and how a 401(k) and Roth IRA work. None of these falls under “Reading, Writing or ’Rithmatic” as a mandated requirement, but all are required for graduation from the Buhrmann School of Family Management.

Take advantage of those “teachable moments” with your families. There’s no better education than one that pays you back tenfold. A few minutes spent in the chaos of today can help create a financially secure tomorrow.

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