Involve your kids in learning basic personal finance concepts and teach them saving through budgets
Since schools no longer teach basic personal finance concepts, a lot of parents feel it is their job alone to teach money matters. Don’t forget to let your kids learn with you by involving them when you learn about your own personal finances.
Today’s essay is by Lloyd Windle, a student at the University of Arizona. He shares how his parents taught him personal finance ideas by taking him to seminars and forcing a budget later in life.
Check out Lloyd’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
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How I Grew Up Financially Prepared
My parents have taught me many great things about finances from being a six-year-old, to a sixteen-year-old, to a college student. Ever since I was little, I was taught that if I wanted a toy, I would have to work to earn the money to pay for that toy.
Having grown up with four siblings, there were always chores to do around the house allowing for plenty of opportunities to work and earn some cash. However, we even filled out simple forms of time cards to make sure we got paid. So from these early personal finance experiences I learned from my parents that I must work for what I want.
Learning Personal Finance Concepts like Saving
When I was twelve years old, my parents took me with them to Dave Ramsey’s Financial Peace University classes once a week for several months. I learned several large concepts that I believe will help me very much in my new adult life. The first and major is to save for things I want or need. Loans and credit cards can have high interest rates that can create a dangerous downhill spiral of debt. Another major concept is the idea of an emergency fund: some odd value of money to help you in the cases of an emergency.
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These concepts are the major foundation for all of my personal financial decisions today. For example, my car has broken down several times and needed several hundred dollars in repairs, since I had an emergency fund and been saving my money and not going out to eat, and buying fancy things, like most of my peers, I was able to pay for the repairs without much distress or getting into debt. Additionally, when I was little I saved my birthday and Christmas money for a couple years so I could afford a personal computer.
Forcing a Budget to Teach Kids Saving
When I was sixteen, my parents stopped paying for all of my activities directly. What they did is calculated how much money they spent on my siblings and me and gave me the even portion of that money per month.
I soon realized paying for things like clothes, and gas, and marching band fees, was going to take a lot of budgeting practice and planning. I researched budgeting and with the help of my parents, discovered the envelope method of budgeting.
Good Budget is a cellphone application that used this method of budgeting and allowed me to effectively plan budget for all sorts of things like SAT fees, clothes, for prom tickets. I soon realized that I needed more funding if I wished to do all the after school activities I wanted to do, plus going out with friends and the likes, so my parents helped me through the process of applying and getting a job. Then from there budgeting and saving for things like a computer and a phone were easy.
My parents also taught me about investing into stocks and precious metals. They have suggested mutual funds as those have very low risks and are great if I do not want to watch and analyze the stock market. Additionally, I know to watch the prices of precious metals and invest when the prices are low.
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All these experiences have surmounted to teach me to save for things I value, and work hard for the money I earn, and take on as little debt as possible. These lessons my parents have taught me about personal finance will affect my finances for the rest of my life.
I want to thank Lloyd for his essay on learning basic personal finance concepts like saving and budgeting. Be sure to support Lloyd by sharing the article through social media and check in August for the winner of the personal finance scholarship.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.