Educate about Finances

          When it comes to finances, we as a culture have labeled this as a “taboo” subject and don’t speak about it as openly as we should. Now, this is understandable to a certain degree… You wouldn’t walk up to a stranger and ask about theirs nor share yours. When it comes to family and friends, though, we should be a little more open about it, again, only if it’s on topic or can fluidly be brought up.

This, I feel, would take away a huge amount of ‘power’ that employers hold over us, and open a lot more doors for us to ask/require more in money, benefits, vacation, etc. When it comes to family though, we need to completely destroy that wall and openly discuss finances within, especially when it comes to educating the children.

          So, when is the “right” time to start discussing this when them? Well, the best time would be when they’re younger of course, it is never too early to start teaching them how to EARN money in the form of chores.

If yours are anything like mine, they won’t understand the WHY of this though. It then falls on to us to make it fun for them and demonstrate why they will, eventually, need to earn their own money. This can be in the form of races, bets, or of course punishments (but this equals no money earned but can be taught as “debt”.

You messed up, now you OWE me chores, the chores are their form of currency to trade). Then, next time you go to the store, make sure to take them, have them pick something out they want. If they have the money, allow them to pay for it. If they do not, explain to them WHY they won’t be able to get it.

Now, another way that I don’t recommend yet unless they are teenagers, if they do not have their money with them then they can come to you for a LOAN to purchase the item and they will owe you the money as soon as they get home or within a week or two (this is a slippery slope though, because now you have to remember to COLLECT the money owed, or all you did was show them they can borrow money and not repay it. Then, be prepared to pay off their debts for the rest of your life).

As they get older, they can venture out and do yards, wash cars or houses, help throw trash, walk dogs, and hundreds of other things to earn money. This will teach them how to approach people, speak properly, have correct body language, build confidence, and start seeing that they can actually earn MORE money when there are MULTIPLE SOURCES of income!

          Once they have done the work to earn their monies, now you show them that if they save it for an extended amount of time, other than just until the next weekend, they will be able to buy bigger, better, or more important things. This will of course depend on certain things like age, your bank, etc. but this is a good time to start the “piggy bank”, or “money envelopes”.

Now, one is easier than the other, but I am a huge believer in the latter. With Money Envelopes, you can also start teaching them how to budget for certain things. Don’t get crazy with it, but make 2-4 envelopes for them and label them for things that they want or that you know they like to do; this can be a new bike, movies, games, skating rink, eating out or any number of other things.

Also, this doesn’t mean to increase their allowance if they haven’t earned it! Just because they only get 5 dollars for doing the trash and dishes and 10 dollars to clean the yards, but they have four envelopes… they need to learn how to identify what is more important and requires the money first.

If done properly, this will ALSO inadvertently start showing them how to use the “snowball” or “stacking” methods to pay off debts in the future. Of course, though, they won’t know what that is, but they WILL know how to do it, which more important than just knowing what it is.

If you didn’t know what it was, well now you do as well, and I would be happy to break this down for you a bit further if you would like, just simply reach out and let me know.

 If they ARE in fact older though, preteen+, and your bank allows for youth accounts, go ahead, and open this up for them; maybe deposit half into it and give them the other half in cash, or what ever ratio works for you and them. Perhaps they want 1/3 in cash and will save the rest in the bank? Well, then pat yourself on the back because you have a very smart child!

          The next step to teach, when they are in fact in their early teenage years, would be how to GROW their savings! Let them know that hey while saving money is awesome, wait until you find out how to MAKE IT GROW while still saving!

This is also a great time to start educating yourself a little more on the different ways to make YOUR money grow as well if you haven’t already. If you’re unsure where to start, and have no interest in the stock markets, which I greatly urge you to reconsider, I recommend starting at your current bank and exploring their products before venturing out. What you’re going to want to look for is a HIGH YIELD SAVINGS ACCOUNT (<<<check out this link to nerd wallet’s list of best High Yield accounts for 2021).

Just like the stock market, and even prices at the grocery stores, these lists will always change. Some move up, some move down, and some completely get bumped off and replaced by another. What you are looking for is something that has AT LEAST .4% APY (annual percentage yield).

There will always be a bank out there with at least this percentage, so don’t cut your own legs out from under you and accept less. You can also investigate things such as CD’s, Stocks, and Bonds that can be used for long-term savings for better growth.

Make sure you do your own research wherever you choose to go through and look for fees, charges, maintenance fees, and any other way the banks can try to take your money. Also, know, with a CD, once you put the money in you can not add to it until its maturity!

          Now, something most people hardly ever teach (or get taught) is HOW TO SPEND. You think, ‘well, I need that, so I have to pay this. That’s very seldom EVER the whole truth. How bad do you need it; can you wait a few weeks for a better price? Where do you live, can you, and will you take a day or two to shop around and find a better price?

Or, for certain things, can you wait months, until a sale is going to happen, and purchase it then? With the last option, there is always that chance you won’t be able to buy it because it will be removed or sold out, so take that into consideration as well. What about putting in the leg work, or in most cases today, the finger work, and finding a coupon?

Then there is always name-brand vs store-brand. There are so many ways to save money, even if it’s downloading an app, starting a shopping visit, and scanning your receipt to get SOME of the money back. It boils down to just putting in the effort and taking the time to actually save money while you’re spending it.

          It may feel like you can always come to this discussion later, and you can, but how much money will be wasted, unearned, and lost by then? This is an instance where it’s “never too late”, but it’s also a case of “the sooner the better”. Let’s break this taboo topic down, and help ourselves, our loved ones and anyone else out there that we can by passing the knowledge and saving for OUR financial freedom!