In many parts of the country, kids are spending much more time at home. The time spent commuting to and from school has been cutout for those still learning from home, and many extracurricular activities are still canceled. Instead of letting your children play Fortnite all day, this newfound time each day creates an excellent opportunity for parents to teach their kids about money.
Sadly, personal finance classes are non-existent in today’s academic curriculum. Children learn to add and subtract, but they don’t learn basic financial literacy. They aren’t shown critical money concepts like how to make their money grow, how to avoid debt and how to become financially stable adults. The result: widespread financial illiteracy and a society that continues to struggle with money. The worst part is it doesn’t have to be this way. We can’t rely on our education system to teach these important lessons, so it’s up to parents to teach their children. Now is the time.
American consumer debt is nearly $14 trillion! This includes mortgages, car loans, credit card and student loan debt. While some of this debt is necessary (we all need a roof over our heads and a way to get around), the majority of it is a result of foolish spending, carelessness, thinking we can pay it off eventually, believing you have your whole life ahead of you to pay the debt down and other delusional reasons. Parents, remember this: all debt starts out small, and before you know it, once you add on interest and just getting by making the minimum payments, you have quickly dug yourself a really deep financial grave.
If you are a parent, carve out 30 to 60 minutes each week and start teaching your kids how money works. Even if you haven’t been extremely successful with money yourself, you still owe it to your kids to better prepare them. Who knows, you may even learn something yourself.
If you don’t know where to start, there are so many amazing resources from books and videos to online articles and games. One of the best ways to help your kids understand money is to tie their allowance to chores. This teaches them to connect money to value and teaches them to think, “How can I create value in exchange for money?”
Some other basic principles to focus on:
- Teach your kids about money from objective reality. It’s a nice thought to say everyone, regardless of financial status, has access to all the good things in life. It’s also naïve and untrue.
- Right or wrong, wealth offers privileges, and the sooner kids know it, the more likely they are to do something about it.
- Teach your kids how to make their money work for them. Teach them that money is a dynamic medium of exchange for goods and services that should circulate and grow.
- Teach kids that money is something to look forward to and to look at it from a consciousness of freedom, possibility and abundance, not something to dread or be frightened of.
- Having money won’t make you a better person; it just gives you more opportunities.
Financial illiteracy is the number-one economic crisis in the world, impacting more than five billion people across the planet. Don’t let your children become part of this statistic. Be a responsible parent and teach your kids how to avoid the cycle of endless debt, unnecessary spending and financial cluelessness. Teach them to take control of their financial future. The earlier they are when they learn about money, the more prepared they’ll be and the more success they will have with money. With this extra time on their hands, there’s never been a better time than right now to do it.
Steve Siebold is a Certified Financial Educator (CFEd) and author of the book ‘How Money Works: Stop Being a Sucker.” www.howmoneyworks.com