Teaching Your Children About Money

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I wanted to continue with the few lessons we have learned in the Dave Ramsey class we are taking, per everyone’s request. We are moving quickly along in the class – Financial Peace University, and really learning a lot! If you want to see the other posts I have written about this class, check out these other posts:

A few weeks ago in the class, Dave Ramsey touched on a subject I feel is important, especially in today’s society with so many people in debt. It is important to me because we are having a baby, and I am sure we will have more children, so I think it will be helpful to us.

The subject is teaching your children about money. Dave Ramsey had a lot of good tips and I wanted to share them with you, and my thoughts on it as well!

Teaching Your Children About Money
The quoted text below is from Dave Ramsey’s Financial Peace University Workbook. Anything not in quotes is my own words.

Tips for Teaching Your Children About Money

1. Teaching your children about money is not the school’s responsibility, it is your responsibility.” 
I wholeheartedly agree with this. The school can only do so much, but at home, they are our kids and it is our responsibility as parents to teach them important life lessons. How to handle money is one of them.

2. Pay commissions not allowance; we have enough people in our society who expect to be made allowance for. If you work you get paid; if you do not work, you do not get paid.” 

One thing Dave Ramsey talks about doing with his kids is giving them “commissions” instead of an allowance. He believes that kids should not just get money to get money, but rather they should work and do chores to earn money. I totally agree with this. Growing up, my parents would give us money if we did extra chores such as dusting and other ones that weren’t part of our usual chore list. The only time we would get money for free from our parents was if we had a good report card!

3. Teach by example. Show them how you live debt-free, how insurance works, and how an IRA works.
This is very important because if parents do not know how to handle their money, their children most likely will not learn either. No family is perfect, but if you have a budget, teach them about budgeting, teach them how to save, and teach them any other useful things that your family does to save or make money!

4. If the children are young, use a clear container to save. Visual reinforcement is powerful.” 
I think this is a fun way for young children to watch a little bit of money accumulate over time. Maybe have a jar that you put any old spare change into whenever you have it and then go to the bank to cash it. I have done that for years,  and I have had about $100. each time!

5. “Use three envelopes for ages 5-12: Spending, Saving, and Giving.”
Dave Ramsey explained the purpose of the three envelopes as this: When you give your children money for chores or “commissions” as he calls them, then teach them responsibility by having them split their money into these three envelopes. If the child is given $5.00 then teach them that 10% would go to the giving envelope.

Dave Ramsey says parents can have their children use the money out of their “giving” envelope to give in Sunday School or church, instead of the parents giving them an offering. How will the children learn if they are giving their parent’s money and not their own? The rest of the money can be split between the “saving” and the “spending.” This teaches children to save their money slowly and also letting them know they can spend it as long as they are frugal. I really like these ideas, and I hope to do something similar with my children.

6. “Somewhere around 13-15 years old, open a checking account for the child and teach him/her how to run it by monthly reviews.” 
This is a great idea! Believe it or not, I was in college when my mom had to finally teach me how to write a check and balance a checking account. I think this is something every teenager should know how to do to. They are old enough to learn this responsibility and start paying for a few things here and there themselves.

Of course, I know not everyone may agree with these ideas, and everyone’s family is different. This is just a little bit about what we learned with some good ideas and tips!

What do you think about teaching your children about money? I would love to hear any tips you have!

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  1. I love Dave Ramsey! He has so many good tips, for people of ALL ages. That said, my dad is a CPA and didn't teach me ANYTHING about financial security… but somehow, it rubbed off! So I guess, he did teach by example.

    Confessions From A Working Mom

  2. Great post. We have taught our kids (well should say it's a process) that they save some, give 10%, and have some for spending, that includes with birthday money, Christmas money, and although we call it allowance, it's EARNED not just given.

  3. I think the best thing my parents ever did for me was be honest about their financial situation. Apparently, for my parents their parents never even mentioned money to them. So when they got married they had to learn the hard way. With my parents (and Curtis') being so open with us we've learned the true value of a dollar and are much better off than our parents when they were first married.

    I love the ideas Dave Ramsey explains, they will be extremely helpful once baby boy is old enough.

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