Why it is Important to Teach Your Kids About Money
Do your kids understand how money works? Do they earn an allowance for doing chores around the house? Do they baby-sit or mow lawns to earn a few extra bucks? Do you take them to your office during school breaks so they see what it’s like to work a ‘real’ job?
Do they know the fundamentals about saving? Do they understand how to figure out which is the best deal? Do you set a good example for them about handling money?
When I was HR Manager of a consulting company, we hired a college student to intern during the summer. He came to ask me about the FICA and Medicare deductions in his first paycheck. He politely told me he didn’t want this deducted anymore, and I had to keep from laughing. I started to explain to him that payroll taxes are not an option, but realized this was his first job and he had never been taught how much of his paycheck he would actually get to keep. He truly believed it all was his- no one had ever told him about Uncle Sam getting his cut first.
The statistics on college students who graduate with thousands of dollars of credit card debt are shocking. Turns out, as they signed up for classes in their freshman year, they also signed up for a credit card without understanding what it would really cost them in the long run. So before they even start earning a living or saving in a 401(k) plan, they have to pay off years of debt. It’s sad that they’re still paying for the pizza they ate two years ago.
It’s so important for kids, especially teenagers, to understand the concept of money and how it flows in and out of your hands throughout your lifetime. How to save it and how to spend it. Why is it important to give some back to others through charitable donations. If you don’t develop an understanding of money early in life, how can you possibly be able to manage it later on?
Parents have a responsibility to make sure their kids understand how money works before they go into the world to earn that first paycheck. Having this knowledge gives them the confidence to make smart money decisions as they navigate their way in life.