Teach Your Children About Money Now!

My last four or five articles have been about children and money. Those of you without kids might be annoyed by now but this is the last part of a long ride.

My little sister graduates from junior high school today. It seemed like only yesterday that I was changing diapers and teaching her how to spell her name. I’m happy that she’s not yet embarrassed to be seen with her *ahem* slightly older sister. Like all good big sisters, I’m giving her a graduation present. For me, that means $50, but that money also comes with a lesson.

I plan on giving her the $50 broken into five $10 bills. Once she gets all excited about having $50 I’ll promptly take $20 back for taxes and another $20 for savings, leaving her with $10. Am I just being mean? Nope, I’m teaching her a lesson.

Remember that term, “it takes a village to raise a child”? I’m a part of that a village called my family, and I feel that it is my responsibility to teach this particular kid about money, no matter how hard the lesson.

Some of you will rib me, and say, but it’s her graduation. Can’t you do this another time? Nope. She will begin high school in a few months, and this is a prime opportunity to get the idea of how one earns money and what happens to it drilled into her head before she begins the next phase of her life.

She has had previous lesson about money that were appropriate for her age. Every time someone gave her Christmas or birthday money, it was promptly deposited into her piggy bank. Watching the money go into the bank was fun for her. At around age 9 I took her and her little sleepover friend down to our local bank to open a custodial account. She was fascinated with the fact that kids could actually have bank accounts in their own names. I told her that not only could she put money into the bank, but that banks would actually give you free money called interest, if you had enough money in the bank. Her eyes were like saucers at the prospect of getting free money.

As I mentioned, I’ve been discussing money and kids at various stages of their lives all week, both here and on the H&R Block site with So You’ve Graduated. Now What? It’s a sad fact that we do not talk about money with our children, so they end up making the very same mistakes that we probably did as we were forced to stumble through learning about money. Break that cycle with your kids. Begin teaching them what you know about money and saving and do it early. And sometime, just sometimes, you have to make that lesson a little hard so that they get a true appreciation for just how long it takes you to make the money that you hand over to them.

My sister’s next lesson? Earning her own money…as in get a job, get a job.

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12 thoughts on “Teach Your Children About Money Now!

  • I agree with you, But 20 dollars is a lot of tax. This should be more realistic with the proper 8.825 tax or whatever it is in your state. And the savings shouldn’t be taken away, but you as her sister take her to the bank, teach her how to write out a deposit slip and she add it in there on her own. she can see what her savings are and interest. these wont be words said to her but numbers she truly sees and understands.

  • You’re right about taking her to the bank! I am absolutely going to do that.

    About the taxes though, I’m going to hedge a bit. As a single person in NYC about 30% of your paycheck goes to the government as Federal, Social Security, Medicare, State, City, and Unemployment tax. It ain’t pretty, but it is what it is.

  • I think it should be no more than $5-7 dollar worth of tax. You are not actually going to give twenty bucks to Federal, S.S, Medicare etc. Its just an example. An IMPORTANT example but don’t forget the main reason is to teach her and wanting her to actually learn. Secondly, if you are going to cross all your T’s and dot all you I’s than she should file a EZ 1040 at the end of the year to get some of that money back. lol #Justsaying#

  • Hi,
    I wrote a blog post about should we teach our children about money for my blog and for money smart mom. I am a big believer that if we take the time to teach our children we may potentially help them from making wrong decisions when it comes to finances.

    When Mrs.CBB and I were young we both had paper routes and learned the value of money and responsibility. I had my own bank account and just loved walking to the bank everyday to check it. Back then the nice teller ladies all knew me by name. I loved to watch my account grow and made sure it was always on the rise. I would mow lawns, wash dishes, babysit, had jobs on the weekends. I loved to hang out with my mates and pick weeds for our neighbours. Don’t get me wrong I had loads of fun as a kid but I also learned that in order to get what you want you need to earn it.

    I don’t know if and when the education system will buckle down and teach finance to the students but until then I hope parents will fill the teacher role.

    Great Post.
    Mr.CBB

  • Well, she may get annoyed with her for teaching a lesson with her present, but I think it’s a great idea! That memory will likely stick with her for years to come (mostly because of the shock she’ll have when you take some money back – kind of like seeing your first paycheck and then seeing how much is lost to tax). I think what she learns from this could easily stick with her much longer than the amount of money you take back would have!

    • Do you remember that shock?!!! I took my pay stub home to have my mom check it. I remember thinking that I had worked so hard for every penny and such a HUGE chunk was gone before I even got it!

  • I am a little confused with either to give good money to children in the starting year and make them money conscious afterwords or to keep them money conscious from the beginning. Please help out.

    • Good question! I’m of the mindset that you get them conscious about money first and then begin with the lessons. When she was little, having a fun piggy bank to have the money go into was like a game for her. You dropped the coins and watched it zip into the piggy bank and plop into the right slot. as she got olde we counted her money with her, wrapped coins to trade at the bank and then paid her for odd jobs. Making your lessons appear to not even BE lessons just makes it a fun activity for younger children. Good luck!

  • We required our children to save 50% of any money or (money) gifts they received. They learned to save their money and that habit stays with them forever. Great teachable moment.

  • We required our children to save 50% of any money or (money) gifts they received. They learned to save their money and that habit stays with them forever. Great teachable moment.

  • We started teaching our daughter about money from the time she was 2 and able to save coins in a jar and help pay at the grocery store. The younger children are when they understand concepts like the value of money, the better. Our daughter has saved up for toys already at 3.5 years old, and it took a few months of saving to get them. Now she knows how long it can take to save up money. Kudos to you helping in the financial education of your sister!

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