What child has not wanted to have a lemonade stand to earn money, or asked you what he/she could do around the house to earn some money? Chances are, you know a child that fits this description, and have to smile just recalling these episodes. While we have had more than our share of fun money-making ventures when the children were small, we are working now to prepare them for a successful life as adults, with academic preparation as well as providing a sound and practical financial education.
While we learn about so many things in our early years, there are a few things that I wish I had learned about when I was younger. Things like the importance of saving money (the power of compound interest), how to get the most out of each dollar, what does it mean to earn or pay interest on money, what is debt and what does out family think about it? All of these questions, and they aren’t typically addressed in many families across the country. The children are exposed to a limited degree in high school economics, and perhaps they begin to figure out taxes when they earn their first paycheck as an hourly employee (WHY are they withholding all of these taxes, Mom?!)
When I look back on how little we knew when my husband and I got married and bought our first house, life insurance, a car, etc – I am determined that our children will have more knowledge than we did as they make such important decisions. We had no idea of what was involved in buying or selling things of value, of what it meant to have a 15-year mortgage instead of a 30-year mortgage, of the importance of making our money work for us for the future. We were clueless when it came to making business decisions, understanding contracts, the importance of finance, and so much more. We had never been taught these things in school, or by our parents. I guess that everyone figured that we would learn on an “as-needed” basis – yikes! We were determined that our children were not going to have to face these same decisions without an idea of how to make good financial and business decisions.
When we began homeschooling, we focused first on their academic lessons. As time went by and we became more comfortable with a lifestyle of learning 24/7, we worked to incorporate some financial lessons into their learning. In addition to the family game nights of Monopoly and the Farmers’ Game, they learned about portioning their earnings or allowance into categories such as church, savings, and spending.
We started talking about some of our financial choices and decisions as a family, so that the children could listen to our reasoning and how we arrived at our conclusions. The children learn from us all of the time, whether we are discussing the science of gravity or the concept of earning interest or investing wisely – we are their models, in both our actions, words, and thought processes. From the simple ideas of saving money for something that they would like to purchase and the importance of comparison shopping, to the complexities of the time-value of money and understanding how to make money work for you, we have a tremendous opportunity as homeschooling families, to provide our children with a sound financial education.
To get them started on the road to financial wisdom and hands-on learning, consider some of the following steps for each child when they are old enough to handle the responsibility:
· Checking account - joint, in both the child’s name and one parent’s name
· Savings account – joint, in both the child’s name and one parent’s name
· Give them the gift of a share of stock to help them begin to learn to read the financial page, interpret the columns of data, and have some fun in the process, watching their stock change in value. Our favorite stock to give them has been a share of Wrigley Company stock (Wrigley Gum manufacturers!) Not only has it been a good investment financially, it is a company with familiar products. As an added dividend, the company sends each shareholder a gift box of Wrigley product(s) at Christmas time each year!
· US Savings Bonds – which can be purchased at your local bank. They can begin to see how money has a time-value, watching the date of maturity on the bonds, and developing an understanding of saving for the long term.
(To be continued...)
Until next time,
Amanda
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