This is one of many life skills I think parents don't often think about as a necessary part of their children's education. However, when we release our children out into the wild, they need to know how to cook and clean and take care of themselves at home as well as in college or the workplace.
If your child has chores that allow him or her to help around the house, then you are off to a great start. Most kids have to help with the laundry and dishes. These tedious tasks are ones we must all face and are essential to living an independent life outside of the protection of our parents' homes.
Getting paid for work
Usually the discussion of chores with my son leads to a discussion of getting paid for them. Every time my son comes to me asking for a raise in allowance, I remind him that I had to work for my money when I was a child and I still have to work for the amount I get now. He has often brought up that I make more than him and I have always responded with a list of the work I do (at work and at home) and a list of the work he does. I tell him what minimum wage is and that if we were to calculate the time he actually spends on working, he'd be making less than he is now. That usually ends the conversation and work continues (despite some grumpiness). Sometimes we tack on more chores for more money and work continues (despite some grumpiness).
I thought I was doing a pretty good job explaining how finances work in the real world, but I was enlightened yesterday when I decided to educate him rather than clean. Most of the cleaning and donating has been done anyway and we are back on our regular cleaning schedule.
Beginning a financial education
So, I had decided to teach him about money, budgeting and credit cards (and the way they can ruin your life if not handled properly). It is part of what I consider an education of life skills. He is almost 12 and I believe I need to start teaching him finances now. I figure the earlier you start, the more it will sink in.
I think it is essential for kids to know how to manage their money. I never really learned finances in school (see my previous posts Faith in home-schooling reassured and Tax time a taxing time for more on my thoughts about the lack of financial education in public schools). They taught me how to write checks and we moved on.
My goal: Teach savings
My goal was to instill the idea of saving extra money you have left over at the end of each month rather than thinking it is extra and just spending it. I wanted to remind him that emergencies come up (like having to take the dog to the vet) and saving that extra money will help in the long run.
So, I started with an explanation of income, fixed expenses and variable expenses. I used my own budget as an example. (I teach him using multi-sensory methods because he's dyslexic. It helps him to have visuals along with the verbal lecture I give. I also had him view some BrainPOP videos on finances the day before to help explain certain topics before I started with my own discussion on it.)
I explained my logic of figuring how much I spend each month (because some months have 4 weeks and some have 5, I was also teaching averages). I also told him about extra expenses that may come up from time to time but not every month (like the dentist and doctor appointments) and how I plan for those (by putting money into a savings account). I also explained some of the emergencies I have had (usually the car or pets) and how the extra money I have at the end of the month has helped because I put it into a savings account. Notice, I emphasized the savings account a lot. Repetition is a good way to teach.
Don't be afraid to discuss credit cards
The hardest part for me was showing him how much I pay to credit card companies each month for overspending and not sticking with my budget in the past. I told him how many years it has been since I've used these credit cards and that I'll be paying them for many more years to come. At this point we discussed needs and wants (with emphasis on how saving his allowance can help him buy bigger and better Lego items or video games).
By the time we were done, he got to see how much I earn as well as how I spend the money. I had hoped that he got a pretty good understanding of proper management of money (and what happens when you don't manage it properly) and, of course, of the importance of saving money.
What did you learn?
Then I asked the all-important question: "What did you learn?" His answer just blew me away (and not only because it showed he was actually listening).
He said, "I didn't realize how much responsibility it is to have money."
I think my mouth actually hung open for a bit. I had never really thought of money and finances in such a way, but it's so very true and I'm so glad he voiced it.
A huge responsibility
Money really is a lot of responsibility. We spend most of our lives trying to deal with it, manage it, hang onto it, and not let others steal it away from us. It's not just about greed because we all need money to have a place to live, have food to eat, clothes to wear and more.
While it wasn't my goal for him to come away with this revelation for his first major financial lesson, I'm so glad that is what he learned. It is definitely more important for him to realize that money is a huge responsibility.
I still have one lingering fear from this lesson, however. Now that he's seen how much I earn, I only have to wonder how our next conversation about a raise in his allowance will go. I guess if he's willing to work more, I'll be willing to pay more. Although, I may wait awhile to discuss the "cost of living" raise many of us get. He's so smart, he'll find a logical reason for me to pay him that.
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