What have you been teaching your kids about money? I just recently read a great article up over at Mr. Money Mustache right now entitled What I’m Teaching my Son about Money. If you have kids, I highly suggest you check it out. In the article MMM talks about the ultimate gift you can give your kids – happiness.
Teaching Kids About Money
I wrote an article several months back about charging your kids when they do something wrong. This is great as a “stick”, but what about taking the “carrot” approach? Let’s see what MMM has to say…
Mr. Money Mustache setup a “fund” where his son can either withdraw or deposit money. He tracks this completely with a computer spreadsheet. He also gives his son 10% interest per year to teach the fundamentals of investing and compounding interest.
This is amazing! I love this idea so much that I am going to implement it today! I have been pondering for the past year how to help my son and daughter better learn the principles of personal finance. This is a perfect way to teach interest, compounding, saving, healthy spending, and responsibility.
Kids, Chores, and Allowance
Another great thing is that this type of system can help to reinforce healthy habits. Mr. Money Mustache pays his son $0.10 per mile walked or biked. How’s that for reinforcing an active lifestyle? We normally pay our kids $1 a week for their chores such as:
- Clearing the table
- Taking out the trash
- Feeding the dog
- etc.
But, what if we could take this to the next level like MMM did?
How Do I Minimize Kids Screen Time?
As with most parents these days, we worry that our kids are getting too much screen time. Between DS, Netflix, Xbox, and computer games, they do get a bit much of the old screen time. I think we can take MMM’s idea around the $0.10 per mile and use something similar with our kids.
Time spent outside practicing soccer or basketball can be reinforced with small amounts of $$$. Trips around the block jogged, biked, or scootered could also earn a dime. This will help to reinforce exercise and healthy habits with our children. It will also allow our children to better understand interest and compounding as they begin to collect income that isn’t directly going to expenses such as toys, pokemon cards and Skylanders!
Kids Finances Taken to the Extreme
Would it be insane to tell our kids that we are going to pay them $500 a month, but then charge them for food, rent, etc. so they basically end up the month with a couple of dollars? In the end this would equate to their normal monthly allowance. Would this help them to understand personal finance better, or would we be labeled as crazy parents?
I don’t know for sure, but I am toying with the idea of taking things to the extreme just to have some fun with it. Maybe the kids and I can learn something new about personal finance along the way?
Teaching Kids About Money and Investing – Final Thoughts
As Mr. Money Mustache points out – most of life isn’t about money. It is about how having a secure life and achieving true happiness. Many rich kids are less happy than those that come from more modest means. One of the most important things we can do as parents is pass this gift of happiness onto our kids. We can do this effectively by teaching our kids healthy money habits!