10 Things I'm Teaching My Kids About Money

Online, February 28, 2011 (Newswire.com) - It's obviously important that we all get our heads straight about money. For me, it's even more important for my kids to grow up and be responsible with money. Here are 10 fundamentals I want them to understand.

-- Morgan

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With all the economic turmoil going on, I realize being fiscally responsible will be more important (and more difficult) for my children as they grow into adulthood.

Parents have always had to battle things like unrealistic media portrayals and an overall culture of consumerism. But layer on top of that the ridiculous levels of debt we've piled up as a country, and their future looks a little less certain.

Put another way, our kids probably won't have the backstop we had. It's doubtful social security will be around. Who knows where health care will wind up. Taxes are likely to be higher, and at least in the near term (meaning the next 5-10 years), things will probably cost more thanks to inflation, currency devaluation or some combination.

But it isn't all negative. There will still be opportunities for our kids. People will still be needed to teach, to build things, to design building and bridges and roads, to provide health care and nursing and rehabilitation. To work on cars, to serve in the military, etc, etc.

However, to take advantage of those opportunities, our kids must first set themselves up for success. With all that in mind, I offer up:

10 Things I am Trying to Teach My Kids About Money Before They Reach Adulthood

1. No one owes you a thing. Too many people go through their entire lives with the expectation they are owed something. This is not the case, or at least it shouldn't be. All you should ever expect is to be judged, compensated and respected based on your work ethic and your ability to create, inspire and hustle.

2. Debt is a cancer. Debt is a cancer on our society, on households, and on us as individuals. It saps creativity. It creates pessimism. It robs your future dollars. It limits your freedom. Avoid debt like the plague.

3. Save for emergencies...big emergencies. When you are young and many years from considering retirement (and not earning much), it's tough to save money. But I have discovered no softer pillow than having money in the bank for emergencies. Aim to save about a year of your basic living expenses in a simple savings account (no risky investments here). With a one-year cushion, you'll be able to weather storms many others will not.

4. Live simply. In 2011, life seems pretty complicated. By the time you are adults, I imagine it will be even more so. There will be new gadgets and toys and cool services and "got to haves." The problem is, all these things compete for your earnings.

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Right now, this is a "do as I say, not as I do" guide. I certainly can't profess to live simply, but I would love to have more simplicity in my life. More stuff doesn't make things better. It just makes it more cluttered and complicated.

-- Morgan

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5. Sleep on big financial decisions. When it comes time to buy a car, or a house, or book your first major vacation as a family, sleep on the plans for a couple nights. People selling you these things want you to act immediately to lock in their commission, as I would expect them to, but remember that you are the one who has to pay the bill. Some of my biggest financial regrets came because of a knee-jerk reaction. Be slow. Be methodical. Listen to your gut.

6. Protect your credit. Not because you hope to borrow money, but because you may find people extending a service to you may do so for less cost if they think you aren't a big risk. And if those people don't know you well, your credit score may be their only determining factor. It's not necessarily fair, but it's a part of life. Credit blemishes can hang around for a decade, so it's best to avoid them in the first place.

7. Learn to do things yourself, but don't be afraid to call in the experts. You may remember the time your dad rescued a toy from the toilet trap, saving us an expensive plumbing repair bill. Or the time I climbed up in the attic to unclog the air conditioner drain. But your dad knows his limitations, and calls in the experts when necessary. That's what emergency savings are for.

8. Shallow people judge your things, real friends judge your character. Some of the saddest, loneliest people I've ever known have been surrounded by the nicest things money can buy. They often acquired these things to impress people they thought mattered, and in many cases it did - temporarily. Meaningful relationships are based on things money cannot buy: trust, respect, integrity, compassion, love.

9. Don't trade the things you care about for a big salary. Remember what mattered to you most when you were a kid: Family, fun, dreams. These things should remain important to you as a grown-up, but often adults sacrifice these things to earn a big salary. Now, everyone has to sacrifice some to earn a living, but by learning to be content, you may be able to earn a comfortable living while still enjoying other things.

10. Start saving early. Remember those money games we used to play when you were a kid? One of them was an attempt to get you to understand one of the great financial wonders of the world: compound interest. You see, when you save money you earn interest on it. The next month you earn interest on the money you first put in, plus the interest you earned the month before. That's right; you earn interest on interest. Now carry out that example for many years, even decades, and you can understand how some people are able to accumulate wealth. The trick is, you have to start early.

Parents, consider opening a kid's savings account to get them started early. Our kids deposit a portion of allowance earnings every couple weeks and it has taught them a lot about the mechanics of banking - completing a deposit slip, balancing their savings register, etc.

Finally, keep in mind something your great grandfather taught your dad about finding balance. Be frugal, but remember to occasionally stop and smell the roses. Life is short, and it is meant to be enjoyed. Take an expensive vacation every now and then. Buy something of your "heart's desire," even if it doesn't make sense financially. Be frugal in other areas of your life to make room for things you truly enjoy.

Source: Frugal Dad

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Let's try to make the next generation more responsible with money than some of us have been. It's about time we reversed the trend, don't you think?

Let me know what your thoughts are and please take a minute to Like my page on Facebook. I'd appreciate your help in spreading the word.

Think wealthy thoughts,

Morgan Kimble

MorgansMoneyMatters.com

Like this? Take a look at my last article: 10 Strategies For Getting Rid Of Credit Card Debt