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Tips for Teaching Kids to be Smart with Money

Tips for Teaching Kids to be Smart with Money
Alison Storm

As parents we work hard to teach our kids to read, write and ride a bike. But how much time do we spend teaching them to be smart with money? According to financial guru Dave Ramsey, probably not enough. But teaching your kids to be financially responsible is an incredibly valuable gift that will serve them well the rest of their lives. This week Dave Ramsey and his daughter Rachel Cruze released their new book Smart Money Smart Kids: Raising the Next Generation to Win with Money. Before your kids leave the nest Ramsey and Cruze urge parents to make sure kids learn these five lessons. 

Hard Work is RewardedSmart money smart kids

Rachel Cruze says the best gift her parents ever gave her was financial peace. "Because of them, I have complete confidence in my ability to manage my finances, no matter how much or how little I have. That is the best feeling in the world, and it's an incredible gift you can give your kids, too!" she writes. One of the best ways to give your children financial peace is by teaching them the value of hard work. Ramsey talks about his strategy of giving his kids "commission" instead of "allowance." He says that shift helped to instill "drive and dignity into our kids' characters." Rachel says using the word "commission" connects money to the work. And making your kids work for their money - even as young as age 3 - will combat entitlement, making purchasing something as simple as a video game with hard earned money feel like an accomplishment. The book also details age-appropriate chores, tips on keeping kids motivated and how to track their work.

Money Can Run Out

In today's society money can seem infinite. You don't necessarily need money to buy a new car, new appliances or even a new home. But Ramsey and Cruze say that's a dangerous way to teach your kids to live. "If you can teach them the limits of money from the beginning, they'll be much less likely to go into all sorts of crazy debt as they get older," writes Cruze. Ramsey often talks about how people are either spenders or savers, personality traits that you can probably identify in your children as well. But the pair are quick to point out that one is not better than the other and you shouldn't try to change your child, but you can teach them to be good with money no matter what kind of personality they have. Smart Money Smart Kids explains how some of these lessons are learned and that it involves letting your kids make bad decisions once in a while.

Saving for Something Bigger

The book cites recent data from the National Foundation of Credit Counseling which found that 64% of Americans couldn't pay for a $1,000 emergency with cash. Another study found that one in four Americans have nothing saved - not even a penny. Teaching your children at a young age the importance of saving will serve them well for years to come. "When a kid saves money, it is not a mathematical event; it is a maturity event that gives dignity," writes Ramsey. While culture bombards our kids with messages of instant gratification, saving teaches patience. Ramsey and Cruze provide real life examples of how parents can motivate and teach their kids through saving for what they want whether that's a PlayStation or a car.

Kids Can Budget Too

Dave Ramsey drills home the need for adults to have a household budget, but it's also a lesson you can pass on to your teens. Even at age ten, Ramsey says he had his oldest daughter help him by writing checks to the electric company, which helped her to understand why turning off lights and closing the front door was important. The book provides tips on helping kids open a checking account, how to have age-appropriate budget discussions and even planning for a wedding.

Giving is Not an Optionsmart money kids

Teaching your kids to be givers is an important part of the financial puzzle, according to Smart Money Smart Kids. When you teach them to give you are teaching them to be good people. "If you want children who are less selfish and self-centered; if you want children who view wealth as a responsibility, not a meal ticket; if you want children who look at the future as a bright place; if you want children who function with a spirit of abundance rather than a spirit of lack, then you must teach them that they don't own money-- they are simply managers, stewards," writes Ramsey. One of the best ways to teach your kids to be good givers is by showing them. Even if you're already giving make sure your kids see you do it, says Ramsey. The book goes on to provide tips for teaching kids to be good stewards with more than their money, but also with their time and talents.


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