Wednesday, January 14, 2009
How to Teach Kids About Money
Actually, this is a lesson that is valuable for everyone, but is obviously aimed at people with small children (the younger the better). Taking a look around at the economy, most people can tell that we're in trouble. Retail outlets are hurting because people are holding back on buying things they don't really need. Debt is at an outrageous level and many people are "suddenly" aware of how bad off they are because of their debt. Sure, almost everyone has to take out a loan to buy a house, but it's assumed that you can't just save up to buy a car, and that you must max out your credit cards perpetually in order to achieve and maintain the standard of living the TV commercials say you should have. After all, you want to live the same way that movie stars and other celebrities live, even though they have 100 times or more the income you have, right? Most people are unconscious about how their spending habits result in carrying such a large load of debt. They were never taught how to manage money. In fact, most people don't realize that they can live carrying little or no debt. All we really need is to understand some basic truths about money, about our lives, and about self control (I know...such a "dirty" word). That's where the wikiHow article How to Teach Kids About Money comes in. Yeah, it's still not too late for adults to figure out a better way to manage money, but why not pass that wisdom on to your kids right from the beginning of their lives? If you're depending on some high school economics class to clue them in, forget it. It's too late to make a really big impression by then, and they won't gain the self-wisdom to figure out what went wrong with their lives until much later. Last summer, I attended a series of video trainings created by a guy named Dave Ramsey. Before you click that link, please understand that Ramsey is a Christian and ties the understanding of money and debt elimination to Biblical principles. Even if you're not a Christian, the advice is quite good, but be warned, in case you find Christianity offensive in some way. I don't agree with everything Ramsey teaches and there were a few points he made on his DVD lecture series that just about drove me nuts (let's just say that his perspective on "the Law" and mine are quite different). On the other hand, he is very talented at presenting the concepts of financial planning in a way that is very approachable and understandable. He has made a fortune, lost it, learned from his mistakes, and made another fortune that he hung onto this time. He uses his experiences to teach the rest of us that we can be wise with our earning and spending habits, too. Read this stuff. Learning to be financially responsible is very important and especially in a world economy that is crumbling around our ears.