In this series of posts, I am sharing some different ways that I am teaching my daughter about money.
I have more influence on my daughter's money management skills than any other. What I teach her will have a direct impact on her life and generations to follow!
Live it out loud. My goal is to show Melea that everything I am teaching her is relevant and can be practically applied to her life.
A $18 lesson at age five can prevent an $18,000 lesson at age 20. Which one would you choose?
I have negelected my parental duties if I don't teach Melea the lessons I teach thousands of others every year!
Step FIVE: This is a PROCESS not a one-time conversation.
This is not a one-time conversation. Learning is a process. It happens over time. With multiple conversations. With both good and bad attitudes. In different situations. It is intentional.
What Jenn and I have taught Melea so far has been intentional. We plan on keeping it that way. As we approach the next 11 years of her life with us, Melea will be taught many more financial and life lessons.
To wrap up this series, I thought I would share some of the lessons that are upcoming for her. Some are new and some are continuations of lessons already in progress.
- God is the owner. We are managers. We are teaching Melea that everything we have is from God. Luke 16:10 resounds through my head. There is a good potential for Melea to be left with a great inheritance (something the Bible says we should do – Proverbs 13:22 says that "a good man leaves an inheritance for his children's children". If we don't teach her to be a great manager, her life could be ruined by the inheritance!!!
- Giving and saving are top priorities. This lesson is already in process, but it will continue to be reinforced. There is nothing more satisfying than giving to a worthy cause and saving money for God-given hopes and dreams.
- The fundamental business concept of "profit". It is amazing how many business owners forget this concept! Melea will know this concept forward and backward!
- It is OK to wait to make a purchase. Debt is not worth the immediate gratification. The gratification will go away, but the debt will visit monthly. This WILL make me turn in my grave!
- Learn the most powerful word in the English language – NO! Already in progress on this lesson! It is so important to have self-control.
That's it! I hope that this series has helped you gain a few ideas on training your children about money.
Question Of The Day: What ideas have you put into practice as a result of this series?
Another story of life-change was released on the podcast today! Have you listened to the Podcast from Joe? To subscribe to the podcast using iTunes, click HERE. If you do not have iTunes, you can download an mp3 by clicking HERE.
In this series of posts, I am sharing how Jenn and I are training Melea to manage money well.
It is MY responsibility to train my daughter. Not the schools (although they could at least teach a few classes about it!) and definitely NOT the marketers!
It is MY responsibility to live out what I teach my daughter. No one has more influence on my daughter's education than Jenn and I!
Melea has to learn the lessons – both good and bad – about money. The sooner she starts learning the bad ones, the sooner she will adopt the good ones!!!
Step FOUR: Teach the Key Principles!
Anyone who has taken the Financial Freedom Class that I teach knows the Four Key Principles by heart. They are taught at the beginning of every single class – all five of the sessions. You can actually watch me teach these four key principles at NewSpring Church (High-speed internet only – does not work well with Amish internet!)
KP #1: There is POWER when you work TOGETHER on finances. Melea's husband (hurts me to even write this – I am going to go cry now!!!!) will know how to manage finances, and they will work together to win! The preacher pronounces you "as one" and that applies to finances as well.
KP #2: Avoid the DEBT TRAP. Debt is a wealth-killer! I remember the day that Melea borrowed a dollar from Grandma to buy something at Wal-Mart. I said, "Oh my, Melea, you are in DEBT! You are in DEBT to Grandma!!!" She got so wigged out that she almost cried! You may think I am mean. I would say it is CRUEL to let her think debt is her friend or good!!!!
KP #3: Have a PLAN for your life. This creates the REASON for you to plan your finances! Melea has a plan for her life already. She wants to be a veterinarian, move to San Diego, work for the San Diego Zoo, and live in the round hotel. Now, this might change (I will have a lot of frequent-flyer miles if this holds up!), but she has a plan!
KP #4: Have FUN managing money TOGETHER! It is not all about investing every single dollar. It is not all about living in a refrigerator box. The whole reason that we all want to win with money is so we can accomplish our God-given hopes and dreams! I teach this to Melea every single day. By the way, forsaking a high-paying corporate job to go to work for a church and moving nine hours away from family is a pretty good way to show her that God-given hopes and dreams can be accomplished! Look at what this crusade is helping folks do!!! FUN!
Question Of The Day: Have you had a conversation about money with your kids this week?
During this series of posts, I am sharing some ways that Jenn and I are teaching our daughter about money.
The school is not going to teach them about money at all. The marketers are going to teach them that they should buy it now – whether they have the money or not! If you do not teach your kids, who will?
Your kids watch everything you do. You are their biggest hero. What are you teaching them?
Step THREE: Provide opportunities for your children to learn about money
It is incredibly important that your children are able to apply what they are learning about money. When Melea was 4 or 5, she was saving up her money for a big purchase – a Care Bear. This purple Care Bear came with a DVD and everything – can life be any better if one has a purple Care Bear?
This bear had a selling price of around $18, so as you might imagine it took a long time for Melea to save up for this purchase. Now, this is a large purchase AND it is a Care Bear AND the money would do better in a mutual fund, but how can you have a teachable moment if you don't let children have some running room?
So the big day arrived! $18 was saved, and it was time to make the purchase. Teachable Moment: If you save diligently, the day will come to make the purchase!
Melea and I had a "daddy-daughter date night" (we have one every month). She chose to eat at Ponderosa Steakhouse Buffet (because they had unlimited amounts of mac-n-cheese), and then it was time to make the purchase.
We went into Wal-Mart, picked out the Care Bear and headed to the checkout. There was no one in line at the checkout and Melea began counting out her money (nickels, dimes, and quarters). By the time she was done counting, we had over ten people standing in line behind us. I was so proud! My daughter had SAVED for this purchase!!! Teachable Moment For Parents: If you teach your children this stuff early and often, you will have the opportunity to stand back and watch your children win financially in the long run!
Flash forward three years. The Care Bear has now rested comfortably for at least a year at the bottom of the stuffed animal box. You can probably buy one at a yard sale for $1. Teachable Moment: It's OK to buy stuff, but what would have happened to that $18 if you had put it in a mutual fund?
Provide the opportunities for your children to learn about money. It is AWESOME to watch them learn!
Question Of The Day: What opportunities are you providing your child to learn about money?
In this series about kids and money, I am sharing some steps that I am using to train my daughter about personal finances.
It is so incredibly important to play the lead role in educating your children about money! Proverbs 22:6 says it so well – "Train a child in the way he should go, and when he is old he will not turn from it". Remember this – No matter what, you ARE teaching them something. They are watching everything you do.
Step TWO: Walk The Talk
"Do as I say. Not as I do."
I have hated that statement since the first time I heard it. A five year old child can see right through this statement. A mental note is made that "Mom does not even believe what she is telling me. That means that whatever she just said is not very important."
If you are a parent, you KNOW that you have been trapped before by this. I remember that we had told my young daughter (~ 3 years old) that the word "hate" was not a very good word and that it should not be said. The dreadful day arrived (probably 25 minutes later) when I said, "I HATE the stupid Colts! They can't win the big game!"
From Melea (our daughter) comes the statement that just convicts you like nothing else – "DAD! You just said a bad word!"
Oh man! It doesn't get any worse than that! I HATE it when that happens!
When it comes to personal finances, you have got to walk the talk. Model the way. Demonstrate and educate the steps you are taking to win with money.
Here is how Jenn and I are "walking the talk" to teach Melea about money.
- We prepare a written budget every single month. Every. Single. Month. Teachable Moment: You must have a plan before spending any money. (Luke 14:28-30 is a great verse about planning)
- We utilize cash envelopes for the "impulsive" categories such as groceries, dining out, spending money, entertainment, and clothing. Melea clearly understands that money is a limited commodity and when it is gone – it's gone! Teachable Moment: Self-discipline goes a long way toward ensuring success with money.
- We invest money every single month into our 403(b), Roth IRA, and 529 College Savings Plan. We actually show her the 529 College Savings Plan statement every quarter! I remember showing it to Melea when she was four – and she had no idea how to read the number. She would say something like, "Is that more than four dollars?" My answer? "Yes. It is at least FIVE dollars!!!" Teachable Moments: You are so important to me that I am investing in your future (college – which wouldn't even happen for another 14 years at that time!) AND Proverbs 13:11 is true – gather money little by little and it will grow!
- Every time Jenn and I plan our money, we split our money into three large categories – GIVE, SAVE, and SPEND Melea actually has a kit put together by Dave Ramsey that helps teach her this concept. It is called Financial Peace Jr and it includes three envelopes that say "GIVE", "SAVE", and "SPEND" Every time she earns money (No allowances in our house! We promote the "Work = Get Paid; Don't Work = Don't Get Paid" concept!), she splits the money between the three envelopes. We have taught here that 20% should go into GIVE, 20% into SAVE, and that she can spend the rest. Teachable Moment: Life is grand when you are able to GIVE, SAVE, and SPEND!
There is NOTHING better than investing time into your children! The return on investment is so great! By walking what you talk about, you send a crystal clear message that this is extremely important!
Question Of The Day: Are you "walking what you are talking"?
In this series, I want to discuss the importance of teaching your children about money management. It is so critically important that children have a sound platform of financial knowledge. Their knowledge of money (or lack of) will impact their spouse, their own children, their mental health, and their entire future!
Step ONE: YOU have the primary responsibility for teaching your children about money!
Question: Who taught you how to manage money?
Think about that question for a moment.
I can tell you this much. I went from Kindergarten to High School without taking one class taught about money management. I then went to college for four years and received a bachelor degree without having one class taught about personal finances. I then went to graduate school for another three years and received a masters degree – still without one class about money management.
Add that up – 13 years of K-12 PLUS 4 years of undergraduate study PLUS 3 years of graduate study – That is 20 years of formal education without one single class on money management!!! I learned skill sets that enabled me to earn a lot of money, but I had no knowledge of what to do with it once I had received it.
So who do we learn about money management from?
We learn about money primarily from marketers and our parents. For better or worse, that is who educates us about money.
There were great things about money that I learned from my parents. Things like:
- The value of hard work
- Work = Get Paid; Don't Work = Don't Get Paid
- Compound interest is my friend if I am not paying on debt
There were not so great things about money that I learned from marketers. Things like:
- If you want it now, go ahead and get it!
- I'll always have a car payment
- The use of debt can really help me win financially
The bottom line is this. If we do not educate our children about money, who will? If we abdicate the responsibility to educate our children and we mismanage money ourselves, there should be no surprise when our children make stupid financial decisions.
Question Of The Day: How have your parents influenced the way you manage money?