What do you teach your kids about finance?

[wageslave23]

When I was little my uncle convinced me to put my birthday and christmas money into a mutual fund.  I tracked it obsessively and then I started asking my uncle and my grandfather about their investments and started reading the business section of the newspaper with my grandfather.  This led to some really good and really bad investments.  But I learned a lot about patience and not chasing the latest fad.  Luckily the amount of money that I was "learning" with was only a couple thousand dollars.  I'm so glad I learned those lessons early in life.  I think around middle schoo, or maybe a little sooner, I want to expose my kids to budgeting, saving, earning, and investing money.  What are you doing to teach your kids about finances?

[Dave1442397]

I've been telling my 16-yr-old the decision making process behind our major and minor expenditures for years. She may not have understood everything at first, but it has sunk in. She has learned to examine possible purchases - is it worth the money? Do I need it? Would I rather save my money? Can I get the same thing for less?

Now that she has her first summer job, we opened a Roth IRA for her. When she gets paid, she keeps $10 in cash and the rest goes to the IRA (her decision). All her money is in FZROX, and hopefully will sit there for another 43 years of growth.

[NorthernIkigai]

My soon-to-be-3rd-grader has always been interested in how society works: who makes sure that the street lights work, who pays his school director's salary (memorably, his classmates believed "she's really rich because she owns the whole (municipal) school"..., what are taxes, etc. We try to explain things without making it too complicated or too far from the truth, either. We want him to be able to enjoy money and handle it well, but not be too obsessed with it.

Since he's crazy about soccer, we talked about some soccer teams actually being listed on the stock market, and how you can't buy others because they are owned by (for example) rich individuals. Of the three supermarket chains we use, one is privately owned, one is a cooperative (of which we are members), but the third is listed. So he bought some stocks in the listed one for his birthday. We don't follow the price actively, but he knows he's received (a few euros in) dividends from those ones and that the price has gone up, too. Then he wanted to buy a few shares in the cell phone company we use with his own money.

He hoards his pocket money and we pay him a (ridiculously high but mathematically simple) interest on it. There's no sign yet of wanting to invest this money, but the balance of saving and investing is looking pretty damn good so far. He's talked about giving to charity, too, but hasn't yet decided on a goal for that, and I don't want to push him either. We're in a society where charitable giving is less common and smaller scale anyway, since taxes do a lot of the heavy lifting on that front.

[Duke03]

My 8 yr old son who I've been teaching money habits to since he was about 3 is my mini me.  Everyday he will ask me to log into his investment account so he can see how much money he made or lost.  He's even started paying attention to the evening news when they post the stock market updates. I normally pick 5 or 6 stocks and explain the pros and cons and let him decide what he wants to invest in. It's funny because he will get so excited when he sees the market up a couple hundred points.  Then when it's down a couple hundred he just quietly say's tomorrow will be better.  He's a natural saver like me and doesn't like spending money on anything.  It kills him to turn lose of $5 and he will spend a lot of time contemplating a purchase only to put what ever he was looking back on the shelf and tell me he'd rather keep his money.

My younger daughter is a different animal.  I've done all the same things with her and and she is totally indifferent and doesn't care about investing or what she has.  When at the store she will tell me to take her money and buy what ever toy she wants lol.  I'm hoping in time I can turn her around, but she might be too much like her mother lol.

One thing I'm big on is I take my kids with me everywhere and let them see first hand how life works.  They've seen how to negotiate how to buy cars how to look over contracts in the finance office etc. How to go to the bank and open accounts how to buy a house.  It floors me when I talk to younger coworkers that claim they don't know how to do basic financial transactions because their parents never exposed them to them growing up.

[Sugaree]

My kid knows that when he buys a stock he's buying a teeny tiny piece of a company.  We gave him a couple of options last March and he picked MCD and WMT over DIS.  Which weren't bad choices, but then again everything was on sale last March.  We've also talked about index funds and he says he understands, but I'm not sure he really understands the concept.  Kind of like interest.  He knows it's something that "you want to earn but never pay" and I've explained what interest actually is, but he's not earning much, so I don't know if he really understands how big of a force it can actually be.  We just signed him up for the Greenlight card.  I hate paying any fees for banking, but he's been asking for it and they have the option for parent-paid interest, so I might do that just to show him the power of compound interest.

[WSUCoug1994]

I listened to this the other night - some pretty good ideas in there.....

https://www.choosefi.com/raising-your-money-savvy-family-for-next-generation-financial-independence-ep-232/

[brandon1827]

So far, we've only really covered that most debt is bad, that you should save for things you want and pay in cash versus financing, the basics of interest and how it can affect you in good ways and bad ways, etc. He's had a "piggy bank" since he was born that we've thrown spare change into that he knows is not for spending. We also are very open and honest about our finances with him. That sort of thing was a secret in my house growing up and something you never talked about...so we've made it a point to talk about our debt, spending, saving, large purchases, etc. so that it isn't something taboo or mystical to him. As he moves into middle school, we'll start with a basic checking account/debit card and work on how that works in addition to how credit works and a slow intro to investing.

[WGH]

Talked a lot about debt and about the concept of staying within a budget and the importance of savings. Since they are still so young we mainly talk about their allowances and how to best choose what they want to buy, how to comparison shop, how to figure out if something is of good value and good quality. If they really want something they will do extra chores to pay for it and then after the purchase joy has worn off we talk about was it worth it? I also like them to think about utility of what they buy. It's better to spend money on something you use more often rather than one time. I like to take the to the supermarket and show them on the price tags how it will say cost per oz so you can compare a big box of cereal vs a smaller box and determine if you're getting value.

There's opportunities all the time to discuss but I find it best to do it in real life examples.

[kanga1622]

My kids hear a lot about budgeting. They understand we have a grocery budget and sometimes we just have to say no to the extras because they’ve already picked too many that month. And we make sure to talk about the budget being a plan for how we will spend our money. It isn’t that we don’t HAVE the money, it is that we CHOSE to spend (or save) it on something else.

We try to do a lesson at least once a year where we look at jobs available in town, figure what that monthly pay would be, figure in gross pay dedications like retirement, social security, and taxes. Then we look at rental ads and talk about the needs vs wants for the rest of their “income”. My (at the time) 10 year old was amazed to see how hard life would be working for $10/hr if you had student loans or car payments. So we talked through other options: 2nd job, roommates, using the library for internet, living close to work so you didn’t have to own a car, etc.

We just binge watched the Netflix Money Explained series with the now 11 year old. While it was very simplistic for an adult that is interested in finances, it was a good opening for him to bring up questions related to how we handle credit cards and student loans.

[Dee18]

My daughter was inclined toward the "spend what you have" view as a child until I read about the 30 day list.  We started following the principle that, except for food or other essentials, if you want to buy something you should write it down and wait thirty days before spending your money on it.  After that time you would see if you still really wanted the item.  We kept the list on our fridge.  She quickly learned that after 30 days she often no longer wanted an item. When she began summer jobs at 16 I offered her money to start her Roth account, letting her keep her earnings to pay for clothes, activities, etc. I did that for her two years of high school.  she began funding it herself in college. This year, at age 24, she began a job she loves with a Fortune 500 company. I arranged a meeting for her with a fee paid financial planner.  He later told me that she was the first young person who ever said to him that she wanted to max out her Roth contributions even though that would be 20% of her gross salary. 

[Runrooster]

I don't have kids but I have nieces and nephews and I'm regularly dumbstruck by how extravagant their tastes are compared to mine - my tastes at their age or at my own.  I admit I was raised probably more frugally than I would have liked. I wanted nicer clothes, music lessons, more trips to the pizza parlor.  While I spent more for a few years, once I read YMOYL at age 26, I was still able to cut back and have stayed that way.  I prefer not to eat out for health reasons as well as money, but I've also been spoiled for over 3 years of free lunches at work.

Anyway we recently had a brouhaha over Fathers Day because the kids wanted to go to an overpriced restaurant and Grandpa/ma sided with me to eat at home.  At age 16/20, I think the kids should be able to throw some food together, in addition to what I'd made and my brother had made chicken.  Part of the problem is that Grandma can only eat homemade foods due to certain allergy.  The other thing was that I've been to this restaurant, and they always order the same thing - 4 orders of fajitas, something I can throw together on a busy weeknight in 30 minutes.  And the fajitas are $22 plus tax and tip, which I find obscene.  In the past I've "shared" a meal with someone else - eat the free chips and salsa and the refried beans, take some home.

This is a minor example of the kids' financial habits that are so different to mine.  I'm hoping but not expecting them to grow out of it. 

[shuffler]

What are you doing to teach your kids about finances?

Everything I needed to know about about finances, I learned from It's a Wonderful Life.   ;^)

[ender]

I'm planning on effectively giving kids budgets for items like clothing/etc as they get old enough to think about it.

As an example if we would spend $100 on clothing, work with the kids to let them choose and spend vs just buying. They want a stupidly expensive shirt for $80? Great! Guess we're going to GoodWill for the rest of their clothes. Etc.