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Today I’ve got a killer guest post from one of my best buddies in the blogging world, Aaron from Personal Finance For Beginners. Aaron is one of the up and coming rockstars in the personal finance world and he has a real passion for teaching people how to crush their money. Today he’s going to focus in on how to raise money rockstars!! Enjoy!!
Are you intimidated by the idea of what to teach your kids about money? Does teaching your kids about wealth and personal finance send shivers down your spine?
As a parent, you may feel worried that you don’t even know enough about money for yourself much less enough to teach other people about it.
Thankfully, personal finance doesn’t have to be complicated (and the topics that are more nuanced probably aren’t the best place to start teaching children, anyway!).
While you may not be an expert on the nitty-gritty details of personal finance yourself, there are many powerful life lessons about money that you can teach your children regardless of how much you earn.
In this post, you will learn eight powerful lessons that will help you teach your kids about money… And perhaps reinforce some good financial beliefs in yourself as well!
Living a full life doesn’t require riches
In reality, this might be one of the financial lessons that kids can help to remind us of.
As children, few of us were fixated on keeping up with the Joneses’ kids.
Once our basic needs were met, we were able to enjoy creating new things, playing with others, and experiencing the world around us without a focus on money.
If you want to live life to the fullest, you don’t have to be rich.
Do you want to live a better life? Don’t assume that the answer is earning (or spending) more money.
There’s a lot more to being the best version of yourself than driving a nice vehicle (with a huge car payment), living in a big house, or having a lot of money in your bank account.
If you’re seeking more in life, why not try:
- Doing something that scares you
- Practicing daily gratitude
- Being kind to someone each day
Building a strong financial foundation can bring you peace of mind and give you more options and opportunities, but don’t ever think that money is a magic pill that will lead you to a happier life.
There’s more to money than income or net worth
Your financial legacy is more than your net worth.
Take a moment to consider the financial legacy that you’ve received from your parents – and the legacy you want to leave behind for your own kids. Some of the most valuable aspects of a financial legacy don’t involve numbers at all.
The financial legacy of your parents has shaped your beliefs and attitude about:
- Whether you are “rich” or “poor”
- How much money you are capable of earning
- What’s worth spending money on or saving for
- And more…
There’s nothing wrong with wanting to pass along generational wealth – or if you’ve received a large inheritance yourself – but passing along the right financial skills and values may be the most valuable gift of all when it comes to preparing your kids for a lifetime of successful money management.
There’s a difference between rich and wealthy
Understanding the difference between being rich versus being wealthy is one of the most valuable lessons you can teach your kids about money.
In the same way that waking up early doesn’t guarantee you’ll have a productive day, being rich doesn’t guarantee that you’ll become wealthy.
In addition, you can teach your kids that looking rich is not the same as being rich.
Although you don’t need to read The Millionaire Next Door as a bedtime story to teach them the concept of stealth wealth, you can help your children recognize that financial freedom comes from living within your means and saving for the future rather than earning or spending lots of money.
It’s never too early to start saving money
There’s no better time than now for your kids to start learning about the power of delayed gratification. At this stage of life, time is their most valuable asset.
As Matt wrote in another post, “Delayed gratification is the ability to engage in a less preferable activity now to enjoy a more preferable activity or the benefits of the less preferable activity further down the road.”
One of the most popular examples of this is the marshmallow test.
Researchers gave young children the choice: one marshmallow now… or two marshmallows in 15 minutes.
The results of the study?
Those who demonstrated self-control and delayed gratification by holding out for two marshmallows also displayed better academic and career performance down the road.
Help your children understand the benefits of long-term thinking. One of the simplest ways to do this is to encourage your children to start saving money now… whether it’s in a jar, piggy bank, or savings account.
While the coins and dollar bills may not add up to much, developing a habit of delayed gratification will help them to learn that good things come to those who are willing to wait while others grow impatient.
Learn how the rules can help you
As a child, it may feel like rules are only there to restrict you from doing what you want.
(Of course, rules can feel that way even as adults, too!)
However, learning to follow the rules does come with its own advantages. Understanding the rules can help you understand how to make better decisions. Some simple money rules for kids you can start teaching today:
- You can afford to buy almost anything – but it may require waiting or sacrificing something else
- Just because you can afford it doesn’t mean you should buy it
- A dollar saved today will be worth two tomorrow (okay, maybe 7-10 years from now)
As a parent, you’ve probably already seen how your kids are experts when it comes to bending the rules for their own benefit.
The earlier you teach them the rules about money, the sooner they can learn how to utilize those rules to their advantage as well!
You can have fun without spending money
Growing up, there were two words I learned to never say within close proximity of my father:
Wanting to teach us the value of working hard, my dad would always find chores around the house to cure me of my boredom and keep me busy.
It didn’t take long before I decided I should keep my boredom to myself. This required finding creative ways to have fun without spending money.
Are your children always looking for things to do and places to go when they’re bored?
Here are a few of my personal favorites (I still do many of these today!):
- Go on a walk around the park
- Start learning a new hobby or skill
- Invite friends over to play games
- Find a local event or class
- Look for opportunities to volunteer
Remember: boredom doesn’t have to break the bank!
It’s not about what you own
I invited one of my homesteading blogger friends to share frugal living tips she learned from living in a Mennonite community for several years. I was impressed by the deliberate and thoughtful approach they have with regards to consumption.
If you want to adopt a simple, mindful approach to what you own – and teach those values to your children – you’ll want to:
- Buy high-quality goods that are made to last
- Only buy things that you actually need
- Keep your spaces clean and clutter-free
- Know what you own
By applying this mindset to what you own, you’ll increase the quality of your consumption and save money for financial decisions that can give you freedom and peace of mind such as building your emergency fund, paying off debt, and investing for the future.
Commit to a lifetime of learning
One of the greatest lessons I’ve learned from my own parents is the value of lifelong learning.
Your greatest asset isn’t going to be the highest credit score or a winning stock pick. It’s going to be your financial literacy – and your ability to put that knowledge into practice.
There are many ways you can increase your personal finance know-how:
- Listen to personal finance podcasts during work or on your commute
- Check out money-related books from the public library
- Listen to audiobooks on Audible to sky-rocket your learning
- Introduce yourself to new ideas by watching personal finance TED talks
- Join Facebook groups or forums to ask questions and discuss financial topics
- Find in-person events where you can find others who share your financial goals and values
By increasing your own knowledge of personal finance, you’ll not only have the tools to improve your financial situation, but you’ll also be prepared to answer questions from your kids, family members, and friends as well!
While some of these lessons you teach your kids about money may seem like common knowledge, don’t let their simplicity distract you from the impact they can have on your kids’ financial success.
Teach your kids these valuable lessons about wealth and help them put the ideas into practice. They’ll know “how to adult” and manage their money better than many grown-ups in no time.
What do you think is the most impactful financial lesson you could teach your kids? Which ones were missed? Add to the conversation in the comments below or on Twitter @method_moneyor my Facebook page Method To Your Money. You can also find me on Pinterest.
BIO: Aaron is a lifelong entrepreneur and internet marketer who started Personal Finance for Beginners to share experiences and insights from his own financial journey as he pays down student loan debt, sticks to a deliberate budget, and saves and invests for the future.