Teaching Kids About Money in Tough Economic Times

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My heart goes out to families that are struggling financially. Other than a death or an illness, a financial crisis is one of the most difficult events a family could experience together; however, it can be turned into an opportunity for your family to grow closer together, learn new financial skills and experience new adventures together.

In my experience working with families in my Insurance and Financial services practice for the past 24 years, it’s best to handle a crises proactively by sharing “age appropriate” information with your children about your financial situation. However, be sure to share a positive plan on how you’re going to come through this experience stronger as a family.

Here are the steps I suggest:

  1. Teach your child (children) that this financial problem is only temporary and that by being proactive your family will overcome this current difficulty.
  2. Reassure your children by telling them how much you love them and that the financial problem is not their fault. Children internalize the financial struggles of their parents, so it’s very important you do not make them feel guilty for asking for money or things and it’s especially important you don’t make them feel responsible for your family’s financial struggles.
  3. Develop a plan of action on how you are going to overcome your current situation and then share with your children the steps you are going to take to get back to living a prosperous life. Get them involved. This is an opportunity for you and your children to learn or relearn financial skills. See my recent blog article on teaching kids about Goals and Money for more information.
  4. Now comes the fun part. When a family is under financial stress their lifestyle is going to change. This is an opportunity for you to rediscover that “the best things in life are free.” Instead of going out to a restaurant or pizza place, teach your kids how to make a pizza. Instead of buckling under the pressure to buy your child a new video game, make a play city out of boxes and other things you find around the house. Instead of telling your children you’re not going on family vacation this year, take them to one of the parks in your area and spend time in nature. Do you have teenagers? Invite their friends out on a hiking adventure. It may be a little tough getting teens on board, but once they have a few positive experiences you will find most teens want what we all want, love and attention. The cost: free.
  5. Know the signs of depression and anxiety. A financial crisis can be very stressful and you have to be aware of the signs of anxiety and depression in your children, your spouse and yourself. Seek professional help in dealing with the emotional impact of a family financial crises. The United States Department of Health and Human Services has a good resource at this website address: http://www.samhsa.gov/economy/.

There is hope! By applying solid financial principles and strategies, a little time and patience, you will overcome your current financial struggles. You will be stronger as an individual and as a family. You can use this time to teach your children one of the most important lessons of their life, that money is not everything.

As someone who had a young family at the age of 17, I know a little about what you’re going through. I followed the advice above and it worked for me. I think it will work for you, too.

Jack Vincent teaches you how to avoid the 17 pitfalls that lead to financial slavery and how to use the 23 principles that lead to wealth and prosperity. His book, The Way to Wealth Special Edition, is an updated, easy-to-read, modern day version of Benjamin Franklin’s, The Way to Wealth, originally written in 1758. His book has the practical wisdom you need to build wealth and gain financial freedom!


Money – Goals – Children

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Recently I was asked by a national publication to talk about Money, Goals and Children. As a father of 4 great children, I know something about kids, money and goal setting. I used real money when teaching my own children about goals and financial responsibility. Here are a few excerpts I submitted to the editor.

How do you make goals real for kids?

I used money to teach my children from an early age about goals. I would pay my children for jobs they would do around the house. Many parents demand their children do chores for free and I suppose that’s okay. However, since you are going to provide your children with money for clothes, toys, and activities anyway, why not teach them how to handle money while providing them the lifelong skill of knowing how to set and accomplish goals at the same time?

How do you help kids keep focused on their goals?

I always tried to match my child’s age with the focus required for the task at hand. A four year-old child only has an attention span long enough to pick up toys, so I would develop tasks for them that would match their attention span. To keep them focused, I would use something that already motivated them. For example, one summer my two sons and their friends wanted to build a clubhouse in the woods behind our house. I agreed to help them with the cost to build it but they had to come up with $50 of their own money for supplies. Within three days they earned the money required, so that weekend we went to the lumber yard to buy the supplies and build the clubhouse. By the way, our whole neighborhood had sparkling clean cars that week because of the kid’s motivation to earn that $50.

What are the elements of a “good” goal?

  1. A good goal should be written in pencil. It’s “ok” to change your mind. We all change our minds from time to time and we should teach our children there is a difference between revising a goal or quitting when faced with a challenge.
  2. Goals need to be written down for clarity and also so you can remember what it is you are trying to accomplish.
  3. Once written, the goals need to be placed around the house so you can see them often.
  4. Your child should be able to imagine herself attaining the goal.
  5. Most importantly, accomplished goals should be celebrated! Reinforce success.

Keys to teaching about goals and money

  • Lead by example. Set goals with your children and then work together to accomplish them. Some of our best memories as a family were formed when we were working together to earn enough money to buy something or go someplace.
  • Pay them fast. Don’t make a child wait for money. Their attention span is short. A young child doesn’t understand waiting for payday. Even a teenager will quickly become discouraged if you make them wait beyond the weekend for their pay.
  • Make the job and compensation age appropriate. I wouldn’t offer to pay a ten year-old boy $50 to change the oil in my car. Likewise, I wouldn’t offer to pay my teenager $2 for cutting the grass. Children should be compensated fairly based on their age and the type of job they are doing.
  • Look for opportunities for your child to exercise his or her new goal setting skills. Most shopping disagreements with my children vanished once they had money to spend on the things they wanted. One time my daughter wanted a special pair of tennis shoes that were very expensive. I told her I had $65 for her “back to school” tennis shoes and that if she wanted the $95 pair, she would have to make up the difference. We both left the store that day getting what we wanted.
  • Most of all, make it fun and easy for them to accomplish their goals. You will accomplish more by sharing with them the joy of setting and accomplishing goals than you would by showing them how hard they have to work. Life isn’t always hard. When they learn how to set goals and accomplish them, they will seek harder challenges on their own. Have fun!

Jack Vincent teaches you how to avoid the 17 pitfalls that lead to financial slavery and how to use the 23 principles that lead to wealth and prosperity. His book, The Way to Wealth Special Edition, is an updated, easy-to-read, modern day version of Benjamin Franklin’s, The Way to Wealth, originally written in 1758. His book has the practical wisdom you need to build wealth and gain financial freedom!