Today’s post is from our regular Wednesday contributor, Cat.
I know that my kids are only two months old, and right now, I’m just trying to get them to sleep four hours straight, let alone learn about finances.
However, I’ve been thinking about the money lessons I want to teach them for quite some time, and there are a few in particular that really stand out.
My own parents paid me an allowance and taught me about saving, but I definitely want to go even deeper to ensure my kids don’t make the same money mistakes I did.
Hopefully I can impart these lessons slowly and over time. I hope that with enough repetition, all of the things listed below will seem like second nature to them.
1) Pay yourself first
This is the most important lesson that I hope I can impart to my children. Too many people go way too far in life without putting money into their savings accounts. I know it might not be the same for everyone, but every time I’ve waited to save money at the end of the month, I never have any left! The best thing any of us can do is to put money in savings first at the beginning of the month. That way, we get used to living on a lesser amount and our savings accounts grow all at the same time. Extra points if they learn to save in high yield savings accounts.
2) Give to others
Saving money is awesome, and it’s something everyone should do. However, it’s also important to me that my kids give to others. I want to teach them how to look for charities and organizations that have causes related to their interests and passions. I want them to know that we’re very fortunate and that it feels good to share our money and time with those who are less so. I hope they become interested in this on their own from watching their parents and that it won’t become one of those forced lessons.
3) Get it in writing
Many money mistakes or misunderstandings happen because people didn’t get it in writing. This applies to that interest rate you were promised on your new home or the lease that a realtor promised you was yours. Things happen all the time and plans fall through. Because of that, it’s always important to get it in writing when money is involved, no matter how simple the contract or agreement is.
4) Invest in what you know
This is, of course, Warren Buffet’s famous piece of advice, but it’s something I want my kids to understand as well. I want to teach them about the stock market from a young age, explain how things work, and help them to understand how to research the best companies to invest in. Rather than getting swayed by the news or friends’ opinions, I want them to invest in what they know. I don’t want them to let someone on TV or one of their co-workers convince them to buy a particular stock. Each decision they make should come from their own research and understanding.
What are some of the money lessons your parents taught you?
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Great life lessons there, and certainly ones that I want to teach my children to follow :)
Great advice for investors of any age. Teaching these money ideas is great but realize that its the acceptance of those ideas by the young person the closes the deal.
After what we’ve gone through with racking up debt and paying it off, one thing that I am hammering into both of my kids at every opportunity is that it’s OK to not be able to afford everything. It’s OK to say, “No” to yourself. Life will go on if you can’t buy everything you want. :)
Good point on number 3. I think a lot of people gloss over that one (including myself) and it bites them in the ass.
This is great, Cat!!! I’m trying to teach my kiddos the same lessons by being a good money role model. I hope that they listen!
So true. Hopefully they learn by example!!
I bet your kids have learned so much!
Yeah it only takes messing that one up once for the lesson to last a lifetime!
I’m sure they will. Your kids seem pretty awesome! :)
These are all great lessons Cat! We’re wanting to work on many of these as well as teaching them that no one is just going to give you money, that you have to work for it.
Great lessons here. I really like pay yourself first, mostly because I know my parents went way too long before they got serious about saving. It’s scary to think they made it through much of their lives with little to nothing in their accounts! It’s the fundamental lesson everyone needs!
Definitely some great lessons here Cat. I think the most important financial lesson I was tought growing up is that there is no limit to what you are capable of if you have the drive. My dad worked a full time job and ran several businesses. Growing up, a lot of the quality time we spent together was hanging blinds in a new construction home, selling figurines at renaissance fairs, hanging out in the garage while we worked on getting product ready for the next fair. I really appreciate that. Once I left home, I never asked for a dime…I always knew how to seemingly make them fall from the sky!
I can’t wait for a post in a few years about teaching your kids lesson #3. Can you please draw up contracts for them to sign about their chores! It would be such a cute but practical lesson. Pay yourself first is one of my favorites to always harp on and the first one I’d also want to pass on to any kids I may have in the future.
This is great advice Cat especially number one! I wish that I followed that more in my 20s but I definitely make sure that my son is a healthy saver now. That is one of the great things about becoming a parent, you can teach new lessons to your children based on what you learned in your life. And what cute babies you have!!!
These are all great tips! My dad taught me a lot about money. His main thing was to only buy what you can truly afford and don’t buy things to live up to other people’s expectations.
With that advice, your kids will be much more “money smart” than most adults!
I love these lessons. I wish that my parents had taught me to pay myself first. I can only hope that I will teach my daughter these things and set her up for success.
Maybe if you try to talk about index funds it will bore them right to sleep! That’s great advice and if you follow it from day one, it will just become habit. All kids are different but they all learn most from what they see and what their parents tell them.
Great lessons, Cat! And you know me – I love that you and the hubs are already thinking about the money lessons you want to teach your kids. I wish more parents made money lessons a priority with their kids. There are so many lessons that I still want to teach the girls but I believe I have taught them two of the most important – money needs a purpose (i.e. goals) and money is emotional (which is why we need goals). I’m really excited that sharing as something you want to teach your kids too. It’s been on the best lessons I taught the girls too. There was some initial reluctance, but now sharing comes second-nature to them and it’s one of the first goals they achieve (and often exceed). It’s also made them more compassionate and appreciative of all the things they have. All traits I welcome!
Good lessons! I like the get it in writing. I have been burned by not getting something in writing before and I don’t like dealing with that anymore.
DebtRoundUp Me too. It’s no fun!
RetiredBy40 I wish I would have learned some sooner!
The New York Budget Aw thanks – I hope so!
SenseofCents Both awesome lessons!
blonde_finance Aww thanks Shannon! I know they can’t wait to see you again!
BrokeMillennial Haha excellent idea! I’ve thought about them making contracts/agreements with each other when they argue so I don’t have to play middleman lol
JourneytoSaving That is scary! I’ve been there!
FrugalRules Oh yes that especially!
My dad introduced me to investing early own and to saving money in a bank account by showing me that the money was growing. Pay yourself first is so important. Too many people pay themselves last and often times, after spending, there is nothing to pay themselves.
I remember before, my father always told me that I need to give back to those who are unfortunate. And I also teach that to my seven year old daughter.
I love how you want to teach them about charity. It is so near and dear to my heart! I can’t believe they are two months old already!!
Andrew LivingRichCheaply That’s pretty awesome!
Clarisse @ Make Money Your Way I think that’s a really nice lesson too!
Ugifter I know right? Time flies!
4 of the best and most foundational elements. When my daughter gets money now, she gives and saves first thing. Then she has her spending money. We are just starting to teach her about investing (she’s 7). She is interesting in Disney stock. I’m excited about it!
Great tips Catherine and ones they don’t teach kids (although I am quite a youngster myself).. in school..
I mostly was taught about conserving money and living frugally i.e. a penny saved is a penny earned.. Not always the best way, I’d personally rather invest and grow that wealth :) or invest in myself
I have an 8 year old son. We’re doing a couple of things that I think are a little different with him. I own 2 revenue properties. He comes with me when we collect rent. He counts the money, comes with me to the ATM to deposit it into the account and I have shown him the mortgage payment, property taxes coming out and explained to him the extra funds don’t get spent on an Xbox. We have to save for a new roof.
We also have his savings in a DRIP account with RBC shares. Now he waits for the quarterly statements to see how many shares his dividends are buying.