“We want to be rich! We want to be rich! We want to be rich!” Imagine listening to that for over 24 hours straight!
Let me tell you what happened to me a few months ago, after watching Richie Rich with Macaulay Culkin (oldie but goodie). My 4 and 6 year-olds decided they wanted to live like Richie Rich. All the regular clichés came to mind: “Money doesn't grow on trees,” and “Money is the root of all evil.” Even as a child, I remember my father telling me money was dirty and we shouldn't touch it. What effect could those things have on our kids' psychology about money?
As a finance professional for over 12 years, I was truly puzzled on how to begin to teach them the importance on how money works. As parents, we understand the importance of literacy. We sit for hours reading with our children. However, children must be “literate” about money matters, too. I think parents need to start teaching kids about the importance of money at an early age, why wait? We all want to raise kids who are happy and successful, but we often mistakenly think that money is the key. In fact, the amount of money parents possess has little to do with how children turn out. On the other hand, the attitudes and actions of parents around money issues will have a tremendous effect on kids.
Parents that exhibit healthy money behaviors and communicate strong values to their children will raise children with similar ethics. When parents talk openly and constructively about financial issues and help the disadvantaged, children learn lessons about respect, love and giving.
Parents that exhibit “bad” money behaviors can inadvertently distort the values parents want to communicate. Repeated fights about money, living paycheck to paycheck, or becoming workaholics will convey that money is a negative thing, or isn't worth having, or that making money is more important than having meaningful family time.
So my quest began in turning basic financial concepts into a simple but fun way to engage kids on money matters. My goal is to teach our children how to live within their means, free from the anxieties of debt, and secure in their future. I started using a three piggy bank concept with my kids.
Each piggy bank is clearly labeled. There is: Charity, Save (invest), and Spending. The idea is to have them split all the money they receive into three different piggy banks equally. Do you have to purchase three piggy banks? Well, you can but you can also start out this adventure with containers as simple as plastic Ziploc bags. Banks that are transparent are more fun for children. They can watch their money grow!
The "Charity Piggy" is designed to teach them the importance of giving back. To be able to help others, in and of itself is a blessing. It helps create a rich heart and makes them aware that in life we all have a purpose and helping our community is everyone's responsibility.
The "Save (invest) Piggy" is designed to teach the differences between wants and needs and avoid the trap of instant gratification. Our society pushes us to be up to date with the newest toys, DVDs, clothes, and onward. I want to show them how to plan and budget and see how money can grow if used properly. Learning to wait for what you want is a hard lesson at any age, but one that will keep your kids out of future debt.
The investing part of saving is for kids a little older (10 years or older). I would begin teaching the concept "compound interest" by rewarding them every week or month with “interest” for not taking money out from their piggy bank.
The "Spend Piggy" is designed to help them understand how budgeting can be liberating. As they purchase things, I take advantage by showing them the difference in value vs. price.
The idea of these three piggy banks is the stepping stone in teaching your child how to be rich and how that it is as important as having a rich life. This is a simple but fun way to open the lines of communication with your kids and can help you raise a financially literate adult. The importance of educating our kids how money truly works is vital to their future now more than ever!
If you’re a parent or remember how your parents taught you about money, share with us, we will love to read about it. Send an email to maxxsanchez@hotmail.com or find us on Twitter with the handle @teamsanchezrvp for more fun information on teaching your kids about this subject.
(Max and his wife Karen have been longtime residents of the Miami Lakes community and often frequent Einstein Bagels on early mornings with The Miami Laker newspaper in hand.)