Learning to handle money is very similar to learning how to cook.
We start young — up on a stool in the kitchen mixing up some basic ingredients or chopping things up for the first time, while our parents anxiously look on. Generally, we make a heck of a mess, are more of a hindrance than a help, but have a lot of fun and learn something along the way. And the next time we clamber up on the stool, we are just a little more knowledgeable than last time.
But becoming proficient enough to learn the skills needed to serve up a palatable dinner, on time, to your family literally takes years of trial, error, learning and practice.
Learning about money is the same! From a very young age and continuing into adulthood, we need years of practice to learn how money works. It’s not enough to just earn money, we need to prepare our kids for dealing with finances in the real world — from credit cards to investing to retirement planning.
As soon as parents realize that if they can teach a child to produce an edible dinner, then they can also teach their kids about money habits, they’ve won half the battle.
With my daughter, who is now 13, since she was a tiny child, I have spoken a little and often about how we use money in our lives. It’s never too early to start talking to your kids about money, and no question is ever off-limits.
In practice, teaching kids about money management comprises hundreds of small practical lessons and conversations spread over many years. Over time, I’ve seen that my child has learned enough about financial literacy to start making good choices of her own. It’s made her curious to know more. Plus, she is also learning to cook! She is more than capable of baking the most delicious sponge cake for us to enjoy, but whipping up a family dinner, well, she still has some way to go yet.
Teaching my daughter about personal finance has taught me so much. In our home, the conversations continue daily, and eventually (and sadly), she will leave home. But I know that I would have taught her enough to head out into the world and take both her cooking and money skills with her!
Ruth blogs at thehappysaver.com all about how she and her family handle money. What’s the secret? Spend less than you earn, invest the difference, avoid debt and budget each dollar that flows through your hands. She firmly believes that if you can just get the basics right, life becomes easier from there on in.