Who Taught You About Money?
My grandfather was a great man. He taught me many things such as work ethic, the importance of family, taking pride in my work and financial responsibility. His work ethic was tremendous. He retired after 30 years with Ohio Bell on a typical Friday and on Monday morning, started his new full time career as a stock broker. Although he meant well in his money savings, he didn't always strike a healthy balance. There are numerous family stories of his "unhealthy" frugality. My favorites involve him at age 75 roofing his house and at 77 black-topping his long driveway. His roofing project gathered the attention and aide of the younger men in the family. The driveway he had completed by himself before we even knew he did it.
My point in sharing about my grandfather is that he taught me invaluable lessons through his words and actions. I am very grateful. As parents and grandparents, we are responsible to teach wisely through our behavior and discussions with our kids and grandkids. A recent survey (by Capital One) revealed that only 20% of High School students reported regularly discussing financial topics with their parents. A whopping 34% said they have NEVER talked about money with their parents....34%! The average credit score High School students reported as a "good score" was 500. Oops (If you don't know, 500 is a bad score, good starts at 700 and excellent at 750+). Our kids need our help and it is never too late to start or change a behavior.
Some children will ask about finances on their own, however most will not.
Here are some ideas and resources to use for a variety of ages.
Teaching our kids to save is a must. The key is to find what works for your family. Maybe it is a glass jar or a container with their favorite cartoon character. It is then important to discuss choices with their money-- Here is what my family uses to encourage a choice after money is earned.
Choices: 1.) Share (church) 2.) Save3.) Spend Then at some point the "piggy-bank" turns into a wallet/purse. Mint.com is a great free app to track and review spending habits. Or try AllowanceManager.com to track allowance.
The Value of a Dollar. There are different views on this. Key is to teach work ethic, responsibility and that nothing is free. Some say allowance should be earned, some say it should just be given. In our family, our kids have set things they must do (chores). Once those are completed for the whole week- they get a pay day. They have the opportunity to do extra chores or be thoughtful helping around the house to even earn extra money (a bonus).
Teach in the Moment. For example, at the grocery store as I swipe my credit card, I ask Kaitlyn, my nine year old, "Am I paying cash for our food?" The first time I asked this she was confused but since then, we have had many discussions why I am using credit- as a convenience and ONLY because I have the actual dollars in the bank to pay off my bill each month. Or try this- when that cool new car commercial comes on... pause the TV (right when all the fine print pops up). Ask them "Would you rather pay for the car and own it or pay for the car for 3 years and then give it back to the dealership?" I am not saying a lease is always a bad idea, but it is a money choice that has to made and understood.
Get a Job. The responsibility and duties of a job are extremely valuable. Think back to your first job- what did you learn? I bet similar learnings will be for your child.
Open a bank account. The simple balancing of a check book or using a debit card can be a big learning experience along with talking to a banker about their money. It is an important process to learn.
Seek out financial learning. Personal financial courses are sometimes offered in Middle School and typically in High School for your child. As well, ask your financial planner to meet with you and your child to share some ideas/tips. Any advisor worth something will love to do this to help educate and as a service to you as their client.
Start a Roth IRA. With a job, even if it is mowing lawns in the neighborhood- there is earned income, which is eligible for a Roth IRA contribution. Picking a suitable investment to watch encourages healthy retirement saving habits. Starting at age 15 and contributing a one-time $5,000 investment (with no additional investments) for 50 years, averaging 7% return will yield about $147,000 tax free at age 65.
Some Resources to check out, I mean it...
Money AS You Grow This site shares guidelines and talking points for specific age ranges with activities to complete from money basics, avoiding identity theft, credit cards to college loans.
Warren Buffett has created a great resource to teach kids about money using short animated episodes and a variety of other tools and family activities.
Teaching kids about money is not an easy task, but it is so necessary. Find what works for your child and family. Grandparents, come alongside your kids in teaching this to your grandkids; just like my grandfather. Fight to be consistent in allowance, chores, discussing topics and share from your money experiences- both the good and the bad. It will likely stretch you to also improve your current financial behavior.
To Your Child's and Grandchild's Financial Success,
Luke A. Fields, CFP®
All examples are hypothetical illustrations and are not intended to reflect the actual performance of any particular security. Future performance cannot be guaranteed and investment yields will fluctuate with market conditions. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of Raymond James. The companies and their opinions are not affiliated with Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.
About Stewardship Cents
Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com.
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