Monday, December 17, 2007

Teaching Kids About Money

When I was about 9, I remember my parents opened a savings account for me. And when I got cash from relatives, I would go to the bank and deposit it. The good thing is they taught me the importance of saving money. But the problem is, I don't think I was taught on how to spend it. I pretty much learned about investing and taking risks from personal experience. So I intend to make sure to teach my daughter about money throughout her childhood.

Today I found this article about 12 ways to Make your Kids Financially Savvy. The author has 2 children, and he shares about what he's doing to teach the kids about handling money.

I hope to teach my kid about handling money, from savings accounts, delayed gratification, saving for a goal, making calculated risks, using credit, and more.

My daughter is very young right now, but she is a good student. I tell her that we need to save money for future goals, such as vacations, disneyland, and college. I also tell her that mom and dad works hard to get paid. Then we have money to spend. So she seems to understand this and I look forward to teaching her more as she matures.

I know some friends who have credit card problems. They have 2 kids and a dog. And they have gone into serious credit card debt twice. They have expensive cell phone plans ($100/month), have the latest Razr phones, has a cleaning lady come in regularly, and wants to buy the most expensive $300 Christmas photo package at the mall. No wonder they are paying hundreds of dollars in credit card interest. Are all these purchases needed?

So how do I save? I try to save money by using a low cost prepaid cell phone from Virgin Mobile ($20 minimum for every 90 days), I take photos myself and get Christmas photo cards from ($25 for 75 photo cards), and we clean our house ourselves. So the end result is we have drastically different situations. I'm not being smug, but I do things to save money. But the money we saved has enabled us to have more options in life, such as going to Hawaii last year, and to enjoy life. We're not perfect, my wife and I go over our budget and we have decided to spend less eating out, and cook more meals.

I want my daughter to be able to manage her money wisely. Because I have seen firsthand the problems stemming from misuse of money.

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