We all know that teaching our kids about money and finances is an important task that schools just don't do. That means it's up to the parents to educate their kids about finances. Since I don't have kids of my own, I went to visit a friend who has a teenage boy who is excellent in the personal finance area. I figured that my friend must have spent hours coming up with a plan to have his son understand so much about saving and personal finances at such a young age.
"So, can you give me an outline of how you went about teaching him?" I asked my friend.
He laughed. "I never did a thing," he replied.
"Then where did he learn so much?" I asked.
"On his own," he said and then told me the following story:
Apparently, one week, his son was complaining about the amount of allowance he was receiving and wanted more. Money was tight and my friend was frustrated and basically blurted out, "If you want more money, you can have whatever you're able to save this household."
My friend thought this was the end of it until his son began coming to him with ways the family could save money and asking for payment when the ideas worked.
"At one point, I ended up paying him $300 for his weekly allowance because of all the areas he was able to trim expenses," my friend said.
The hardest part? "I had to be willing to expose all our finances to him as he got better and wanted to earn more money. It was a bit embarrassing to see all the places we were wasting money that my son could find."
Brilliantly simple. Give kids a monetary incentive (especially when they're in their teenage years and want as much money as they can get) to learn first hand how to save and budget. While it may take a bit more effort on the parents' part to get something like this started than it took for my friend, it would be an invaluable lesson for any child for his/her entire life.
As I was thanking my friend for his help and about to leave, we heard a voice from the other room. "Don't forget to turn off the lights when you're done in there," his son reminded. My friend rolled his eyes and I laughed. It was the only time I've ever heard a kid reminding their parents to turn off the lights and I guess that in itself says it all.
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