Teaching Kids About Money And Work

By Sunny Istar Lee, Certified Financial Coach

How can you teach your children about money and work? Lead by example through education. Research shows that the most common cause of childhood entitlement is lack of education about money. Parents give children money without making them work for it. And children spend it almost immediately without any understanding of where the money came from, what it took to earn it, and how to use it properly.

It is crucial for children to understand the connection between money and work as early as possible. Inevitably, children will grow up and become adults. They will go to college, get married, have children and grow old. It’s the cycle of life. And they will need to know how to make money, pay the bills, pay taxes, save for future, invest and spend money properly. Why wait until later when the stakes are high and the rewards are much harder to gain? Now is the time to learn about money and work.

MONEY EARNED, NOT GIVEN

Teaching kids about money and work is a process. In my book, “Is Your Child a Money Master or a Money Monster?” I shared this concept in greater details. In short, I believe that money should be earned, not given. Some parents are afraid of having their children work hard for money, and they treat their children like delicate flowers or even worse, put them on a pedestal and almost worship them. But children will never learn how to manage their own financial lives if they don’t learn how to do so from an early age. Otherwise, they might become hopelessly dependent babies in adult bodies for the rest of their lives.

Children are curious and eager to help. They, like adults, want to feel wanted and needed. They also want to add value to their family, so encourage your kids to do age-appropriate chores at home. It can be emptying the trash, raking leaves, watering plants, folding laundry… you name it. Don’t expect them to do these chores perfectly if they are still young. It’s not about perfection nor performance; it’s about doing work to the best of their ability with a good attitude. If you need additional help, please visit the Downloads section for information.

OUR HUMAN BRAIN LOVES REWARDS

When your kids finish their chores with good attitudes, give them a reward or a commission. Be sure to shower them with applause and compliments too. Rewards allow your children to feel appreciated. Make rewards small but fun and inspiring. Give them money, buy something they’ve wanted for a long time, go watch a movie together or share some yummy food with them. It is vital that every job has a reward. Cultivating a positive correlation between work and reward in our children’s hearts and minds cannot be accomplished overnight. Like a seed, it takes time to germinate, sprout, grow, and bear fruit.

HELP YOUR CHILDREN SAVE MONEY EARLY

If you give your children a monetary reward, help them save it first and invest it later. If your kids are very young, give them a small, transparent piggy bank and a paper wallet—which can be powerful tools of money mastery. Once their piggy banks are full, take your children to the bank or even to your brokerage firm to open an account with them. They can learn to navigate the banking system or different investment options. In the beginning, teach them the simple way to allocate their money. When they are ready, teach them about budgeting and diversifying their portfolios.

START TEACHING THEM ABOUT FINANCE

Parents, don’t disqualify yourself because you didn’t study finance in school or are not confident about your own financial literacy. If you are a parent to your children, that is enough. Parents are the best teachers and the most influential role models in their children’s lives.

Perhaps you can teach the simple money principles of becoming rich by working hard and adding value to others. Or discuss the concept, “The soul of the diligent is abundantly supplied.” Couple these principles with basic fundamentals of earning, saving, budgeting, investing, and sharing money for greater effectiveness. If you don’t know, learn first, then teach and share while you learn. That’s what I did to teach my sons. I believe it is important for parents to teach their children about money as early as possible. Because if you don’t, someone else will like it and you or your child may not like their message and results. So learn, teach and guide your children with confidence towards a greater future.

Children will one day become the future leaders of the global economy. Therefore, teaching them about money and financial responsibility is critical not only to their future success, but also to ours. So get started now.