VOL. 133 | NO. 100 | Friday, May 18, 2018
Rays of Wisdom
Dana and Ray Brandon
Teaching Your Kids About Money
Ray and Dana Brandon
Ray’s Take: Did you know that only 17 states require high school students to take a course in personal finance? Unfortunately, financial literacy is often left out of the American education system and it’s up to parents and guardians to teach kids everything they need to know about finances.
Teaching your children financial literacy skills should start early and it’s one of the greatest gifts you can give your children. Many adults I work with who struggle financially do so because they were not taught basic financial skills growing up or were raised by adults who did not demonstrate responsible spending or saving habits.
“It’s actually easy to teach kids about money,” says Jayne A. Pearl, an Amherst, Massachusetts-based author of “Kids and Money: Giving Them the Savvy to Succeed Financially.” “Turn your day-to-day activities into learning experiences. Trips to the bank, store or the ATM machine can be a perfect opening for a discussion about your values and how you use money. When children are very young, you can work money concepts into your child’s imaginary games, like playing pretend store or restaurant.”
Teaching your kids the difference between wants and needs is a great place to start. Even the youngest children can differentiate between a want and a need. You need food and clothing, but you want a toy. You shouldn’t buy something you want unless you have taken care of your needs. Even we as adults forget this basic money management skill.
You can also help your children develop financial muscles by not purchasing every item they request. Even more powerful is demonstrating this skill in front of your children by avoiding impulse purchases yourself. When my kids saw something they wanted, they would ask me to “loan” them enough money to buy it on the spot and take it out of their savings account later. I would offer to take them to the bank to get the money out first. By the time we got to the bank, the craving usually passed.
Remember that teaching children about money can’t be accomplished in one conversation. It will take years and years for them to understand all the money management concepts. So start your journey early and never stop.
Dana’s Take: The best way I learned about money as a teen was by earning a paycheck.
Most teenagers today do not work for a paycheck. After-school sports, homework and exotic vacations seem to have taken the place of a “J.O.B.” Babysitting and cutting the grass are about as rare as a pop song with no explicit lyrics.
Ray and I are guilty as any parents of letting teen privilege get in the way of our kids’ employment. Maybe this year, a job will be that exotic “summer experience” they were seeking.
Ray Brandon, CEO of Brandon Financial Planning, and his wife, Dana, a licensed clinical social worker, can be reached at brandonplanning.com.