Suze Orman: Money and Kids
Awhile back I saw a PBS program with Suze Orman and “The Money Class.” After watching her on PBS, I checked out the audio version of her book from the library. I must say that I like her advice on how to teach kids about money far more than any other financial advisor I have read.
As you may know Scott and I have posted before on this topic. What is different about Suze’s advice?
1. Pay for work done and do not call it allowance. Kids are working for money just like adults do.
2. Have a list of tasks/work that they can do and the dollar amount they will earn for completing the work. You have easier tasks that pay less and harder tasks that pay more. However, your kids must master the easier smaller paying jobs before moving onto the harder better paying jobs. This is how it is done in the workplace, a worker masters tasks and then learns others and progresses which typically leads to making more money.
3. Pay your kids every two weeks, which is typically how most people are paid at work. This will teach them to make their money last for two weeks.
4. Do not tell them what to do with their money. If you set a good example with your actions your kids will mimic you. So let them know the options of spending, saving, and charity, but they make the ultimate decision.
5. Also, do not foster negativity toward working. Let your children know that you work, get paid, and in return are able to provide for the family.
6. Budget! Do not spend out of your means and it is okay to let your children know that. It is a teaching moment in that you can say that a certain item or activity is not in the budget this month, but we can save for it next month.
7. Suze also says to let them be a part of the process in learning how to pay bills each month. For example, when you are paying the electric bill let your children see the bill, how it is metered, the comparison of previous months and charges. If you use online banking then let them click the mouse that pays the bill. You are able to explain how online bill paying works, debits and credits, plus show them that electricity, gas, water, trash service is not free. It costs money to maintain a home, apartment, business, etc.
8. There is also a way to include kids with the budget making. If you let them be a part of paying the electric bill you can also create a family challenge. You can set a goal as a family to lower the electric bill by a certain percentage within a specific date, if the family meets the goal then the percentage saved is split between the family. Suze said that you will notice lights being turned off, shorter showers, etc.
9. Never pay your children for good behavior or bribe them. Yes, that is a hard one. I know that I have done this. I also know that once Scott and I are together working as a family that I will be very cognizant of this because it does not set anyone up for success.
What do you think of Suze’s advice?
As an update to my earlier post on kids and money. I did teach my kids about debits and credits, the ATM machine, and the debit machine at stores. They grasped a lot and already knew quite a bit. I really want to set a good example because I learned the hard way. And yes I believe we learn from our mistakes and they make us stronger, but I want my kids to be set up for success from the beginning and then make mistakes because they choose to not because they were not educated in finances.
Cheers, ~ Alie
