It doesn’t matter if the economy is up or down. Your kids are watching what you do, especially the way you spend, save, invest, etc. Bookkeepers are a great way to teach kids about money because we focus our careers on helping families and businesses do the most with what they have. So think like a bookkeeper and teach your kids great lessons like what to watch, how to think, and even some fun stuff.
1. Money Must be Earned
Children tend to think money comes from ATMs when they are little. That technically may be true. But kids need to know that their parents go to work each day to earn money. They must do the same if they want to earn money once they are old enough. Some easy way to get kids to learn the value of a dollar include:
- Doing Extra Chores – Be age specific when assigning chores. Pay a fair price. Encourage your kids to negotiate for better rates.
- Shop Around – Kids who want a certain item may not know it is most likely to be sold at different prices. Give them an incentive for finding the lowest price.
- Get a Job – Kids as young as 10 or 11 can get a job doing chores around the neighborhood such as walking dogs, watering plants, etc.
- Sell Their Stuff – It’s no secret kids outgrow their toys as fast as they outgrow their clothes. Get them to sell the items themselves so they may do whatever they like with the money.
- Encourage Saving – Have a child who wants something and they want it now? Give them an incentive to wait. For example, give them a dollar to buy candy at the store, then incentivize them by offering them another if they don’t spend it for a given period of time.
2. Don’t Micro Manage
Kids often believe that results from actions should come immediately. This isn’t so in the financial world, where it can take years for an investment to pay off. Everything worthwhile takes time. Instant gratification is not common, nor should it be indulged. Self made millionaires do not happen over night. Even the latest YouTube sensation had to build up an audience before making that viral video. They even still have to work to keep, as well as gain viewers, by producing relevant, quality content.
3. Visualize
Kids who want to grow up to be super heroes, cowboys, professional sports players, and the like often change their mind. That doesn’t mean they shouldn’t have a vision. One exercise includes creating a vision board for kids who tend to be more visual. This includes filling up a bulletin board with images, articles, and other clippings of what they would like to achieve in the long or even short term. Kids who are more analytical can write letters from their future selves telling them how they got to be who they are, how much fun it is, etc.
4. Play a Sport
Even the most uncoordinated kid can learn something by playing a sport. Learning to win and lose with grace are extremely important for anyone. The sooner it’s learned, the better. Sports can also show kids what happens when they work hard to practice at something, as well as what happens when you don’t. Playing a sport will also help in the long run, as those in power often play a sport or two as adults. This especially true for sports such as tennis or golf. Kids shouldn’t be forced to play a sport they hate. However, make them choose one if they hate them all.
5. Compound Interest
This is one lesson we wish we had learned sooner. Basically: the sooner you start to save, the more you will have later. Describe the concept of compound interest using specific numbers, as research shows it is more effective than giving an abstract description. For example, if your kid sets aside $100 every year starting at age 10, they’ll have approximately $23,000 by age 60. If they wait until they are 30 to do this, they will only have $7,000. Use a Compound Interest Calculator to see how much money they can have when investing a certain amount at a certain interest rate. You can also find inspiring examples of kids who have utilized compound interest to make lots of money.
6. Talk About College
It is ready to talk about college once you’re child has a reasonably solid idea of what career they would like, usually some time in high school. Have them research colleges with the best outcomes for their career, even if you plan to pay for 100% of their tuition. They should be able to explain why their top choices are best. If they can’t do it to you, imagine their chances with someone from the college’s admissions department.
Does your kid have no interest in a career or college? Talk about their limited career options without it. Some careers pay very well with no college degree. Even they require a plan, as well as work.
Houston Bookkeeper
If your business or family needs help with books in order to maintain healthy finances, contact us.