Talking to our children about money can be a daunting task. Where should we start? And how can we specifically help younger children understand the importance of budgeting? Let’s take a look.
“By around age six, a child should understand there are three basic things to do with money - earn it, save it or give it away,” says Brandan Chasteen, a Financial Advisor at Edward Jones. “We can focus on helping them understand that to earn money means sacrificing their time.”
Brandan advises to begin giving a small allowance to teach children the value of hard work. He notes, “Make sure kids use their own money when they want that cool new toy. This will help them understand the process of buying and saving.” He also suggests getting kids involved in discussing the family budget at a young age. “The sooner they can start learning the value of their time and their parent’s time, and the family values that guide how to save and spend money, the better,” he adds.
The teenage years are a great time to help kids understand they should earn, spend and save money in ways that align with their values. He says, “Teaching kids that every dollar has a job to do and we have the responsibility to be good managers of every dollar we are blessed to receive should be a continued point of focus.”
Brandan shares that he asks his clients three very important questions at the start of their business relationship:
1. What did you learn about money from your parents?
2. What do you think you are teaching your kids about money as they are growing up, and is this what you want to be teaching them?
3. My business tends to be a ‘family business’ and I would love to be your child’s advisor someday. I will ask them these same questions maybe 10, 20, or even 30 years from now. How do you hope they will answer the two previous questions?
SIDEBAR
“ The Richest Man in Babylon”
Brandan gives the book “The Richest Man in Babylon” to every one of his client’s graduating senior children. He highlights some of his favorite parts and builds a ‘spark notes-esque’ version for them to include YouTube video summaries. He elaborates on the stories surrounding the book’s five truths.
1. Pay yourself first. If your time produces income and you only pay others, you are a slave to them. Pay yourself so one day your wealth can pay for the things you need.
2. ‘Luck’ tends to find people of action but in all cases wealth building is hard work.
3. Wealth is not a matter of how big your income is, it is about discipline. Simply stated, Income minus Expenditures equals your Personal Wealth (I-E=PW). If you make $40,000 a year and spend less than that, you can have greater wealth than the person who makes $100,000 and spends it all.
4. Sacrifice and work hard today and it can lead to opportunities to grow your passive income down the road.
5. Don’t forget to bless other people when you have the means to do so!
Brandan Chasteen
Edward Jones
Brandan.chasteen@edwardjones.com
615.372.8660