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Teaching Kids About Money

What does it take to teach kids about money and financial independence? For parents who themselves aren’t certain how to create long-term plans to effectively manage finances, figuring out how to teach their kids how to do it is a learn-as-you-go process.

But it’s not as complicated as you might think to get started. The key is to balance common-sense ideas about saving money with age-appropriate ways to do it.

Teaching Kids About Money

Teaching Kids Financial Independence: The Gig Economy

In more traditional finance models, the 9-to-5 job is one of the backbones of a nation’s economy. But in the 21st century with financial technology, decentralized employment, and the ability to hold staff meetings virtually, the gig economy has forced a major rethink of American employment.

Teaching kids that the gig economy can help them achieve their goals is an important step. You don’t have to encourage your children to give up on a traditional job, but the gig economy can work well as an opportunity to find side hustles, part-time college jobs, and other opportunities that can be a financial help along the way.

Teaching Financial Independence: Maintain Good Credit

At a certain age, it’s not really practical to be bombarded with a lot of technical information about credit. What kids really need to know as early as possible is the simple mantra, “pay your bills on time, every time.”

On-time payments are a vital part of establishing and maintaining good credit. The child who learns how unforgiving this process can be early has a big advantage over those who have to learn the hard way.

And teaching kids how to maintain good credit means teaching them at an age-appropriate time (think junior high or high school here) how to use technology to maintain those on-time payments.

Teaching Kids To Use Financial Independence Tools

And by that, we essentially mean using auto-deductions, ACH withdrawals, and other forms of automatic payment to ensure no payments are ever late or missed.

There are plenty of other digital tools for managing your finances, but none are as important for the newcomer to credit as the ability to create set-and-forget automatic payments. Paying on time, every time on a manual basis is a recipe for disaster if you are a busy person. Technology can help.

Financial Independence Lessons: Teach Your Kids To Own Things

In the 21st century, Adobe does not sell software discs, it licenses a creative suite to users who essentially rent the software to use it. We don’t purchase movies, we stream them.

The 21st century is full of digital content that is impossible to “own”. And we see pushback on that from people such as the collectors of vinyl records, hardcover books, and DVD boxed sets. Some finance blogs want to advise you to stop telling kids owning a house is a safe investment.

Some of these writers believe that other investments may be safer such as 401(k)s or Roth IRAs, etc. But as the crash of 2007-2008 taught some of us, those “safer than a house” investments weren’t so safe after all.

It’s actually a bad idea to tell kids not to own property if they can afford to do so. The right property and the right owners can be a winning combination in terms of financial independence. But it takes care and attention to detail to make it work.

Telling kids not to own a house is a dumb idea. Telling kids not to own a house if they aren’t sure they can afford to do so is a very SMART idea.

Teaching Financial Independence: Hidden Fees, Excessive Fees

Teaching your kids to look for hidden fees when they use services or apply for credit is a very good thing to do. Some adults aren’t even aware of some of these fees.

A great example? Consider a situation where a mortgage lender sees that interest rates are rising again. Some lenders don’t bother adjusting the interest rate on the loan every time. Some prefer to hike closing costs instead.

If you don’t know to look at both the rate and the closing costs and then compare those to other lenders you could be tricked into thinking you got a real bargain on the interest rate.

Teaching kids to look for things like this requires you to learn about how it all works yourself, but searching for hidden fees in the fine print of a loan agreement is something anyone can do if they can read or have the document read to them.

Learning How To Think Like A Business Person

True financial independence means knowing the difference between a bargain and a mere price adjustment. You can teach kids some financial critical thinking skills by taking them to the supermarket and comparing the prices on rolls of toilet paper.

How much does an individual roll cost compare to the price of a four-pack? In some cases, the individual roll price x four rolls is cheaper than the four-pack. In others, the four-pack is the better buy. But how much is a 24-pack per roll by comparison?

A business person looks at the 24 pack, which is often cheaper than the equivalent purchased as a four-pack or individual rolls and chooses the bulk price break knowing that they will definitely use all the toilet paper and that the bigger payment now means buying less over time.

Knowing when to apply that model counts, too. It doesn’t work so well for perishables that could go bad long before you use the larger and less expensive amount. But for more durable consumables, buying in bulk makes more financial sense. Teaching that to kids is a smart move.

Teach Your Kids To Avoid Financial Scams

What should adults be telling their kids about giving out personal data on the phone, the internet, or anywhere else? The same things the Federal Trade Commission, the FBI, and any other government enforcement agency does.

Don’t give personal data to third parties you have not initiated contact with, and don’t click on links you get in email or via social media. Those two rules of thumb can go a long way toward helping your kids avoid scammers, hackers, phishing attempts, and much more.

The same basic protections you set up to protect your kids from inappropriate people and material online should be taught to your kids as the standard operating procedures for dealing with third parties.

Teaching Financial Independence To Your Kids

Some finance blogs encourage parents to teach kids about wealth accumulation. But not every parent is in a position to do this and many parents feel it’s just as important to teach kids about protecting resources, sharing, and working on behalf of other people.

Financial independence means knowing when your contributions make sense, when they actually make a difference, and not being taken advantage of because you didn’t see a scam coming.

Altruism and sharing are important; teaching kids to balance the accumulation of resources with sharing those resources when it makes sense and is compassionate to do so is key.

The old movie Wall Street, with its “Greed is Good” tagline is an outcome to be avoided for many reasons, the least of which being that people too wrapped up in the accumulation of wealth are subject to making emotional investment decisions rather than practical ones.

Teaching kids to invest without emotion is an important step. And for many that means learning how to avoid being too emotionally attached to one investment, one outcome, and one set of options. It is normal to feel disappointed when an investment does not pan out.

But if you teach your kids not to over-invest (emotionally OR financially) you get them closer to a good relationship with money.

Letting Other People Teach Your Kids About Financial Independence

There are California-based agencies and programs that are specifically designed to teach K-12 kids financial literacy skills. One such agency is the California Jump$tart Coalition, which describes itself as a “not-for-profit organization striving to educate young people on the many aspects of fiscal responsibility”.

This agency has more than 50 affiliates within the state as well as some 150 more nationwide.

Another option is the Orange County United Way, which offers a program to families in South Orange County facing financial insecurity. The Financial Literacy Program began during the pandemic and became permanent in 2022.

Some lenders even offer financial literacy options for kids. Orange County’s Credit Union features a section on its official site for kids 12 and older. Topics include saving money, earning, and even borrowing money.


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Joe Wallace has been covering real estate, mortgage and financial topics since 1995. His work has appeared on ABC, The Pentagon Channel, Veteran.com plus a variety of print and online publications. He is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.