What Do Kids Need to Know About Money Before College

Since I have a senior in high school, this topic has been in the front of my mind as of late, so I sat down and made my own list of things I want to make sure we cover before he spreads his wings. Here is our list.

*How to make and maintain a budget
*How to pay a bill
*How to use a debit/ATM card
*How to balance and reconcile a checkbook
*Understanding bank statements
*How to write a check
*How to cash a check
*How to deposit/withdraw money from the bank
*How to open a checking account
*How to save
*Understanding the basics of investing/retirement saving
*Understanding the basics of loan/mortgages
*How to avoid the credit trap

Some of these things are very basic, things you think are second nature, but to an 18yr. old, not so much.  I remember the first time I had my son (then almost 16) pump gas – he had no idea what he was doing, and at that moment I felt like I had failed!!  He was weeks away from getting his driver’s license and he didn’t even know how to get his own gas!!

So, I don’t want to be the same way with finances.  Yes, we have worked some basic principles along the way, but there are definitely grown-up things he hasn’t had to do yet, that he will have to do very soon.  So, I want to make sure he’s as prepared as possible.  🙂

Is there anything that you would add to the list?? Maybe some of you with grown kids??  What is something that you realized they didn’t know after they left the house??

Blessings to you friends!!

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What Kids Need to Understand About Debt

When I was growing up, my parents only operated on cash.  I really always thought that was lame. After all swiping that credit card is so cool!!  So, as soon as someone offered me a credit card in college I say “yes!! where do I sign?!?”.  And that was the beginning of the end.  

I was paying my own way through college and was blessed to have plenty of financial aid, work study, and scholarships to not have to have student loans, but I had very little extra money, so I got credit, and more credit, and more credit to buy things.

As I told you in the beginning, I was so gracious to gift this debt to my marriage.  Awesome, I know.

If you think about it cards are all most kids know, I mean who uses cash anymore?  Everyone has a debit card right??  Do your kids know the difference between that card and a credit card?  Do they understand that when you use a credit card you are spending someone else’s money.  I mean good grief, even monopoly has a debit card version!!  I have had my kids say to me – in response to me saying I didn’t have the money – “just use your card”.  ARGH!!

So, although we are still not perfect with the credit cards, we do try to be open to our kids with the reality of debt.    

If you have teenagers like we do that are months away from college life, tell them to “just say no”. Maybe you remember – those people are vultures.  “Have a free t-shirt, and sign-up for a free credit card while you’re at it.”  FREE – right – if you don’t ever use it!!

The rich rules over the poor, and the borrower is servant to the lender.  -Proverbs 22:7

Train up a child in the way he should go, and when he is old he will not depart from it.  -Proverbs 22:6

Parenting requires training friends.

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Teaching Kids About Budgeting and Saving

I know that kids and money seem like they don’t go together.  I mean, really, why do kids need money – they have us right??  Well, think about it, everything you know about money – when, and from whom did you learn it from.  For me I learned some from my parents, but most I learned on my own.  My hubby and I have made plenty of mistakes with money, and we have done our best to learn from them.  But, we have said over and over that we wish we would have come into adulthood with better habits.  

So, we have been intentional on teaching our kids about money, little by little.  As I said yesterday, the work they do around the house doesn’t always get connected to the money that they receive, but we do when we can. During our financial peace class we learned about having kids split their money into three categories – giving, saving, and spending.  We loved this because we felt it would give them a foundation in giving back, saving and limiting their spending.  

Everyone has a different money personality.  My oldest will spend money on things here and there but doesn’t really waste it.  Thankfully he has learned to live within the budget we allow him. (yay!!)  My daughter nickel and dimes her money away – sonic, vending machines, ya know things like that.  My younger two are pretty good savers, cuz again – what are they gonna spend their money on when they have us??  (Although we do make them use their own money for some things – like when they ask to go get a pop at 7-11.)  My youngest is my best giver :).

After being introduced to this, I found several cute money “systems” on pinterest, like this one.

source: http://blog.bitsofeverything.com

We went with a very simple version and got the boys involved (my youngest was going through a pink phase at the time:)).  

The older ones didn’t really need this they were already carrying wallets and such.  Remember I said yesterday that they get a larger amount each month that they are responsible for managing.  My oldest handles this by not carrying it all at once.  He knows he will most likely need gas money before he gets “paid” again so he keeps some at home.

They each have their own savings account, and when they have $100 in their savings tub we take it to the bank.  We pretty much let them decide how to split up their money.  Surprisingly they were fairly wise about it even at this age (far better than I ever would have been).  I am thankful for the heart my kids have where money is concerned – we are blessed.  

I have a friend who gives her teenage daughters a clothing allowance each month.  Nothing too extravagant, but they buy all their clothes with that money (except for the occasions when mom is feeling nice).  So, if they want to spend it all on a pair of designer jeans – go ahead, just know you won’t be able to buy anything else until next month.  Fabulous!! Thinking of implementing this with my girlie :).

Teaching kids about money is a chore, but we believe it is necessary.  This generation is filled with a sense of entitlement that is ridiculously out of control, and the only answer is for us as parents to stop giving out sooo much.

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How Do Kids Get Their Own Money {Commission vs. Allowance}

A lot of us want to teach our kids about money, and there is a raging debate over whether kids should get an allowance, or whether they should earn money.  The line seems to split on how you pay your kids.  Do you pay them the same amount every time, or do you pay them based on the work they have actually done.

I have to admit that we pay our kids the same amount every time.  You guys surely have caught on by now how much I love Dave Ramsey and his principles on money management, and his ideas for kids are fabulous as well.  {Check them out here in detail.}  He recommends a ‘commission’ for kids rather than an ‘allowance’.  Meaning the kids are assigned jobs, and they are only paid each week for the jobs that were don’t.  The concept is the same in the real world – work and you get paid, don’t work and you don’t get paid. Kids are learning the value of work, time and money.  

I could come up with all kinds of great excuses as to why we don’t do it this way, but to be honest it’s mostly because I’m lazy.  Yes, I said it.  Our kids have responsibilities at home, and they are expected to help out with other things when they are asked without whining and arguing.

We have tried many, many, many different types of chore charts for the kids, and they worked great as long as I was maintaining them.  So, after the many, many, many different tries – I gave up.  

source: http://www.organicfamilies.blogspot.com

I would still recommend the commission method, there are times when I withhold allowance if I feel they have not kept up with their responsibilities, but it would be better to have the proof on the paper so to speak.  I have many wonderful ideas on my pinterest board!!

source:  http://todaysfabulousfinds.blogspot.com

You’ve most likely heard a parent of a teenager say, “I’m not a parent, I’m just an ATM.”  Sometimes it really seems like the only reason the kids come to us is when they want something, or they need money for something.  We got really tired of this really quick, so we put our big kids on a spending allowance.  They receive a set amount every two weeks, and they are to use this money for any and all expenses that occur outside of our home.  If they want to have lunch with friends, a coke, go see a movie, etc they use their money.  When that money is gone, they are not to come for us (or anyone else for that matter) for more money.  

This has been such a blessing for us as parents – no more ATM syndrome.  🙂

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Get The Kids on Board

If you decide to make a financial change in your family, it’s going to take everyone to make it work.  

Obviously, if you have younger kids you may not hear too many complaints as you might if you have older kids.  

My kids definitely had mixed emotions when I announced that I was quitting my job last spring. But, the two older ones understood the financial impact and the younger ones did not.  

It has definitely been an adjustment for us all.  We tried our best to not budget with my income included, but we definitely used it for any unexpected expense, or splurge.  

Now, there really can’t be splurges and unexpected expenses really throw a wrench in things.  

There are many ways to include your kids in the money managing of your home.  One thing we have done to include the kids is the have them help with saving for big things, like fun family vacations. Loose change is always fun to collect and you would be surprised how much you can accumulate.  

Thrift shopping can be fun for the kids.  Make it into a scavenger hunt of sorts – who can find the best deal. We have a couple of really neat resale shops in the area that my older kids like.  A little more pricey than the thrift store, but still a good deal.  Hand me downs are another way we survive the clothing nightmare that could be. Clothing four children can add up to big $$$’s.  We have been blessed for years by hand me downs for our children and we pay the blessing back by handing down our kids’ clothing to friends.    

Clipping coupons and shopping sale ads can be fun for kids too.  

Including them in finding the best deal not only helps make the adjustment a little easier, but it also helps teach them the value of things.  Why pay $20 for something here, when you can get virtually the same thing for $15 here.  

Blessings Friends!!

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