Monday, March 06, 2006

Commenting on another blog

I usually scroll through some daily finance related blogs (mainly the ones listed on the right side of this page) and I read one recent post over at No Credit Needed that I wanted to comment on.
He mentioned how when he was growing up his parents really didn't discuss money issues with him. He ran into some debt but has done a great job working his way out of debt and is now on to his savings goals.

His post reminded me about how important it is to teach children about money. Why is it such a guarded topic? My parents were pretty open with me about money issues and this is how I learned about credit cards, how to buy a house, loans, etc. It seems too many parents are potentially setting up their kids for a fall when they grow up by not teaching them any money basics, the pitfalls of debt, and the importance of savings. Our savings rate is near 0% (or possibly negative) and I think it's up to today's parents to help reverse these figures by teaching their kids.

A 10 year can grasp some of the simple concepts of savings and credit cards. It's important to teach them that credit cards are not "free money" (I've heard many kids use this phrase) and how important it is to save for the future.

I'm still a very young guy, but if/when (!) I have kids here are some of the things I would do:

* Start them off early because money concepts can be said in a simple way.
* Have them set their own savings goals. I do it for myself, so why can't kids? I would probably come up with some sort of game and have a savings goal that is somewhat easy to attain to not discourage them if they don't make their goal.
* Give them an allowance, but require them to save a bit and talk to them about how to spend their money
* Once they reach high school, I would encourage a part-time job (10 hours) just so they could experience working for their own paycheck

I'm sure to come up with more, but these are just the ones I thought of right now.
I just think that if parents spent some time teaching their kids at a young age, then they will have fewer financial problems when they grow up. They won't have to go through some of the mistakes their parents made.

Stockdiva posted a few links to some stock picking constests (here and here)


Tim said...

Good ideas for your future kids.

jim said...

My parents kept the financials away because they wanted me to focus on studying and enjoying my life as a child. That being said, I agree with you, that you can do all that while educating children on being fiscally disciplined (as well as disciplined otherwise) and it can't possibly hurt.

ncnblog said...

Hey, thanks for mentioning my post...

It is strange for me to think about my parents and the whole money issue. They did many things well...we learned how to work hard, we learned to be thankful for what we have, etc. The area that they struggled in was teaching me HOW money worked. And, to this day, I think that they still struggle with that. Where to invest, how much to save, interest rates, etc. I just wanted to try to clarify. My parents did not struggle to teach me the VALUE of money, but they did struggle with teaching HOW to MANAGE money. Does that make sense? Thanks again for your thoughtful post, NCN

Russell Bailyn said...

Interesting post here... I was just contacted by an elementary school which I do 403(b) work with regarding teaching a seminar on how raise money-smart kids. One helpful strategy for doing so is not to "tell" kids what is smart, but to make it full interactive. The allowance system works well, and food stores tend to be good places to explain monetary lessons. Young kids with only a few dollars like to spend extra money on snacks/treats. I think equally important would be teaching a high-school level class (besides econ) on personal finance. Some people don't even know how to write out a check when they're in college!