How to teach children financial education?

[andreasro]

Kiyosaki has a cult following that I just don't understand.

Some made it a cult. Some, like me and others, just like to take what they think they can use from anyone and anywhere possible.
I'm among those who believe that life isn't all about just black and white, and that there's grey, too. Anyway...
...We have to bear in mind that each of us has his/her own level of education, field of knowledge, discernment etc, whatever. Also, our choices are our problem, so I don't care what others choose; I just respect their choices, and learn something from them, if possible.

Worked for me. I have never been in debt. I have chosen not to work repeatedly since I left school because I could afford to spend out of my savings. I have never wanted for anything. I have my own businesses in which I am only marginally active because I can value my time more than my money. I'm not a millionaire (yet  )  but I have what I want for my kids.

This is the greatest thing about forums like this, on the Internet: we can extend our field of knowledge by learning from those who share their experiences.
What you've just written is a thing I haven't heard of before and it's helpful. Thank you for sharing!

[Twinergy]

One of my earliest memories is of a gigantic piggy bank; I remember it was taller than me when I got it.  My mom would give me all the pennies out of her wallet at the end of each day then I would put them in the piggy bank.  The bank couldn’t be opened without breaking into it, so I never knew exactly how much money I had. But I did get to watch the stack of money grow.   I wanted to open it so badly, but my mom said I couldn’t until it was full.  That magical day happened the summer before I started 1st grade and I chose to buy my first bicycle with the money.  The leftover money went to start my first bank account.  This lesson taught me that even pennies could be saved up to buy something wonderful and  I plan on doing the same thing with my LO’s.

[carpe vestri vita]

That's a great story Twinergy. It's amazing how much little bits over time can add up. It's a great lesson for money (works both ways though, overspending by tiny bits at a time can still ruin someone), but it's also a good lesson about perseverance in general: anything can be accomplished in tiny intervals as long as you commit the time.

I also want to add that Monopoly and the Game of Life, are both good for teaching about money. And that if one is teaching their children to be entrepreneurs then strategy games are well suited as well, things like chess, Risk, and go.

There used to be a computer game where you had a lemonade stand. You had to buy lemons, sugar and ice, then decide on a recipe. The ideal sugar to lemon ratio, and how many ice cubes per cup. It told you the temperature and you could chose where to park your stand (some places were free others charged rent). You adjust your price and sell away.
Does anyone remember that game? Does it still exist? That would be a great game for helping kids with business concepts.

[Ouroboros1]

I remember that old-school game on the Apple IIe 's at school.  They've revamped it as "Lemonade Tycoon" and you can upgrade your lemonade stand with all sorts of different things to help you sell.  Just look for it on Yahoo games

[mom2bee]

I wonder about this alot. My parents taught one thing, but practiced another about money. I want to do even better for my kids, I want to show them an example, and let them experience money and learn about it young. I'm not really sure how to do this. I know I want to start an account for the kid before they are born and will probably give an allowance between the ages of 4-10 and teach them to keep a budget to account for every penny spent.

I think that giving them allowance and keeping a budget is an excellent way to teach because then they will gain financial experience and that is a wonderful teacher. I'll keep thinking and meditating on it though....

[Ouroboros1]

I think that's why a lot of parents aren't "open" when talking about money with their kids--they never learned themselves.  If we had a mantra as a family when I was a kid it was "We can't afford it".  Just repeat it whenever you had a desire or need expressed in a store.  I think that led me to grow up with a scarcity mentality, and a world-view that life is hard, it's difficult to earn money, etc.  I can still remember my dad saying "We don't waste food in this house".  My wife and I joke about it now when we throw away something fattening or takeout, but for a long time I think it skewed how I look at money and work.

[andreasro]

I've just re-read a message Sonya/Mrs.Post made on another forum related to financial education. Not sure she posted here too. And as I find her experience and advice on financial education (her field) very good, I'll post it here. To me, she has a balanced view on this. Check it out.
It is taken from: http://softmozart.com/forum/33-progress-diaries/4284-music-journey-with-my-3-year-old-daughter.html?limit=6&start=24#8393

Hellene does the butterfly thing for motivation. I pay the kids with play money and they redeem it at my store for things like: fruit snacks, balloons, stickers, books, tattoos and other stuff. I go to thrift stores and find good books, and small objects to put in my store and then put a price on it. Sometimes the kids put all their money together to earn things like homemade pizza or cinnamon rolls.

My son is approaching the age and your daughter is at the age where money is a great motivator. It is my firm belief that children should be paid for their hard work. We have a system in our house where my children (I only have one that I used this with and will start my youngest this fall when he is 3) are paid for doing their school work, practicing whatever it is they get involved in and things above and beyond chores. I do not pay for chores that is part of living in a family. But all the things that will benefit him I pay for provided he does a good job. Children need to know that the surest way to earn money is to work. I can't afford that you say. Well, you can if you quit buying things for her and give her the responsibility of taking care of certain things herself. So when my son turns three he will earn $10 a month. I will quit buying things like fruit snacks and anything extra other than birthday and Christmas presents. He has to give $1 a month and save $1 a month and he has to manage the other $8. He has daily and weekly chores to do. Plus he has piano and violin lessons. I don't pay for chores, but I do levy fines when the chores don't get done or when they are done sloppily. I levy fines for having to remind more than one time. I levy fines for not trying. My son has had to pay me for making me wait. As the kids get older and are responsible for more, they earn more in their paycheck. As they do this, I also give them more responsibility over their own lives. My oldest son is 17. Right now, I don't even pay for his co-pay at the doctor. He has to budget for things like that. This was not my idea, I stole it from good friends of mine. This solves a lot of disputes you have in your home if your children know up front that they have to use their money to pay for things. They also know if they want things then they will have to work to earn them. You have to decide what tasks she will earn money for and what you are going to stop purchasing for her. This has worked very well for us. And, when children have to pay for their behavior with cold hard cash, they suddenly develop the habit of attention and you don't have to nag. the only suggestions I have is that you make sure the kids know exactly how much they will earn and how much the fines are. Never be late in paying them. BTW - I delight in saying, "Thank you for not taking out the garbage, I so wanted an extra five dollars this week."

Andrea

[GeniusExperiment]

I think one very important part is being a role model, so educating yourself about personal finance, investments and entrepreneurship. I think "Rich Dad, Poor Dad" is brilliant - agree with others that Kiyosaki's ideas are simple and he wrote 20 books saying the same thing, but his main book is brilliant and I think every parent should read it. Much more important than learning about savings accounts etc., I think it's important for kids to learn about entrepreneurship, to not raise them with the mindset that they need to get some job they don't like some day in order to pay bills. There is a great TED talk by Cameron Herold "let's teach kids to be entrepreneurs"
http://www.ted.com/talks/cameron_herold_let_s_raise_kids_to_be_entrepreneurs.html

[dessydell]

Teaching financial education to our children is not an easy because first of all the we should have to know the grasping power of our child on financial education. Money management is so important for us. 

[Jemi]

This is really interesting and something I have been thinking about. My DD already has an account which I pay money into and hope she will take over but I had not thought about when or how. I never thought about paying her for things, or fining her. BUT, she does get tiny marshmallows for good violin practice and it helped her get over her toilet anxiety too (2 marshmallows for not holding on too long and having an accident)! If she messes up with either of these I eat one or both of the marshmallows  . I guess it would be easy to switch marshmallows for cash! I think if that there would have to be a fine for not doing things, not just payment for doing things.

My daughter is already developing a philosophy about money because if she thinks she has lost something she has started to say "just buy another one mummy" which horrifies me! We all want successful children so I guess we need to teach them to manage any financial benefits this success brings.

Growing up,  financial matters were hidden from us and we did not know how much things should cost or the value of things. I think it is so important to do the opposite with my daughter. I tell her if something she wants is overpriced in one shop and we will get it else where. I get her involved in shopping lists and will (later) introduce her to some aspects of a household budget including bills. I plan to encourage her to start her own business(es) somewhere along the line. I think it is important for her to have skills that she can use anywhere even if she has no passion for it, so I have in mind a couple of things she will learn to do from about 7-10 years old. I met an 18 year old tailor recently who has never worked for anyone and learned to sew at aged 7. She has always made and managed her own money and can see things going that way forever. It was encouraging.

I also want my daughter to have an entrepreneurial mindset not a worker / employee mentality. I guess considering how to foster this cannot really start too early.

[Jenene]

I enjoyed the Ted talk posted by genius experiment.  One thing that I am still thinking about a week after watching it is his comment about how he doesn't pay his children for set jobs but that they have to look around the house, find something that needs doing and then negotiate with him regarding how much he will pay them.  I think Kiyosaki talks about the same thing.  I had planned to start paying my child for tasks/chores but this really is just teaching them the boss/worker mentality - not that it is bad but I would really like to encourage more of an entrepreneur mindset.  It doesn't come naturally to me though so it is something that I'm going to have to think about and work at. 

[Jemi]

Jenene, I don't think I would pay children for doing chores. I think these should be done regardless. I might fine them for not doing them though! 

I think re entrepreneurial development this could be modelled by getting them to think about problem solving where possible, also by modelling it even in small ways like not throwing things out but selling on eBay... I dunno. Also teaching them things they can have as a skill and provide as a service. That is top of my list. If before they reach working age they have a sense of earning their own money they should be creative enough and motivated enough to think of ways to take this forward. Plenty of encouragement and support and helping them to deal with set backs should help too

[AndArr]

That's the eternal question. Bu the truth is that many adults can't deal with money properly. So why do we speak about children? We can get more money doing forex with https://topbrokers.com/forex-brokers/etoro-review but we are just afraid of something

[selem]

The first thing to do is to start giving pocket money and not buy them things that they do not need for life. They themselves must save and decide for themselves whether to spend or not. And then add more household duties and make pocket money equal salary. Then, I would give them a lecture on what a passive is, what an asset is, how credit works, what financial pyramids are and how the market works (there is a lot of such information on the Internet)

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