Teach Children Money Skills – Best Proven Method

photo by inhisgrace, Flikr

It’s no mystery that you want to teach children money skills. If the kids blow it, your financial security will go up in smoke.

As a father of three, I know that no matter how well I connect with me., my kids could cook my financial goose. Have you ever known anyone financially “impacted” by poor financial decisions made by their child-units? Ever known friends who borrowed to pay for their kid’s wedding? What happened? What was the end result? I’m guessing it wasn’t a pretty picture.

Of course you could be the best parent in the world and your kids could still turn out to be schleps. But there is one thing you can do that will be like taking out an anti-schlep insurance policy – and the good news is that it won’t cost you a cent.

What is that one step? It’s called “leading by example” and it’s one of the best ways to teach children about money. If you live in a mansion but should really be in a condo, do you have the right to suggest that the kids watch where their money is going?

It may seem trite, but this one simple idea may be the single most powerful thing you can do to make sure your kids stay on track – and keep you out of the poor house.

I know that it’s very easy to say this but challenging to execute. At least I find it difficult at times.

I recently went through my finances looking for ways to cut spending. It was easy to see how everyone else could save by cutting unnecessary expenses – and hard when it came to me. I’m not proud of this, but it’s true. I wasn’t leading by example at that moment.

Fortunately I stumbled on a solution, and it may be useful to you. The solution I found was to have a family meeting.

The Meeting.

There is something magical about airing it all out that shrinks the ego. It’s easy to be an egomaniac and self-centered in the comfort of my own mind. But when I started talking about these issues out loud in our family meeting, things shifted. I actually became eager to cut back rather than resentful about it. And because I was leading by example, I felt balanced. Actually, I felt better than just balanced…I felt good about myself too. What impact did this have on the kids?

At first, my performance got “mixed” reviews. The kids weren’t crazy about making changes. But it didn’t matter what their initial response was. The point was clear and the lesson had been delivered. I must say in defense of my children that they did get behind the idea of cutting back in short order. But the really powerful benefits of this meeting went well beyond the immediate financial cuts we agreed to make:

1. My children learned they could reduce their spending and, contrary to public opinion, it wouldn’t actually kill them.

2. They learned that they have to adjust their lifestyle when life imposes a new style. They learned that you have to roll with the punches. While my kids aren’t checking out engagement ring prices yet, someday they will. When that happens, I want them to really appreciate the value of a dollar.

3. They learned that it’s crucial to live within their means.

Not bad huh? I think these are pretty important life lessons. Maybe they’d learn these on their own anyway over time. When I was a kid, my parents didn’t talk about these things. But that was a mistake. By having family meetings to discuss financial issues, my children were able to witness the process and learn from it.

Have you had an experience like this before? Do you have family meetings? Have things shifted for you and your family as a result?