Helping The Next generation be Financially Responsible

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Prefer to listen? Check out Podcast Episode #54 in Business by the Numbers Here: https://paarmelis.com/business-by-the-numbers

Many people don’t know where to start in helping kids learn to be financially responsible. Teaching methods for saving and investing and more advanced topics can set them up for success all through life. There’s a lot of resources out there for adults to learn how to be financially responsible, but how do you translate this for your kids?  Unfortunately, economics isn’t taught in most schools. People typically get their financial habits from their parents. Understanding your own family and why you have good and bad habits can give insight into how you’re currently building your kids’ foundation.

Do you talk about money in front of your kids? You should! Money should not be a taboo topic for families to talk about. Imbuing the mentality of abundance can help your kids develop a healthy relationship with money. If you’re great at saving but never spend or enjoy the fruits of your labor, then your kids might grow up with a stigma about using their money at all.

Generationally, we’ve been through a myriad of mentalities throughout the decades. The previous generation was a generation of savers. Now, we live on credit and debt. In the 60’s and 70’s, interest rates were so high that the rate hikes in the past few years haven’t phased that generation at all. There will always be shifts towards and away from saving within generations so the important thing to teach kids is to be intentional. What does this mean and how do you teach it? Allowances are a great way to start helping kids understand the value of money.

Introducing a tangible currency in the house (even as young as 4 years old) helps create an ecosystem around a coin or token and essentially an economy. Here’s a scenario from Nick Warren of Ark Financial (www.arkfinancial.com) a company that helps people figure out their financial futures.

For every year of age, a child earns 2 coins. If you were 6, you would get a weekly allowance of twelve coins.

There is a price list of services, such as making the bed, picking up toys, putting shoes away, etc…

When parents present the allowance, they also present a bill for services.

At the end of the week, a 6 year old would get twelve coins, minus whatever chores Mom or Dad had to do – listed on the bill as a service. So if mom or dad had to pick up their toys, they’d pay whatever the cost of that is out of their weekly allowance.

With whatever is left, they have to distribute among a savings jar, a spending jar, and a giving jar.

Parents tell their kids that for every week they have savings in the savings jar, the parents will deposit an additional 10% (or whatever amount you choose) of whatever is in the save jar.


There is a price list of services, such as making the bed, picking up toys, putting shoes away, etc…

When parents present the allowance, they also present a bill for services.

This helps kids develop a sense of value around a coin (or whatever you choose as currency). They learn not only savings and spending, but also giving. This encourages mentality of abundance and helps kids wrap their minds around charitable giving.

The other thing that is nice about coins for younger kids, is that they count and see the money coming and going. They develop a sense of magnitude. With credit cards, it’s easy for $4 to feel like $4,000 to a child.

As your kids get older, giving your kids jobs to do in your shop (or around the house) can help them develop a sense of their work value. Even if you’re not having your kids file these forms, you can help them learn how to deal with things like 1040’s, self-employment tax, filling out tax returns and investments. One big advantage is if your kids are filing taxes working for you, they may also experience hiccups that come with taxes and entrepreneurship under the safety of your household, without the fear and anxiety that can come with trying to figure it out on your own.

Intentionally helping your kids understand money and developing a healthy, can-do attitude towards financials will ultimately set them up for success, but also impact future business partners, communities, and family in a positive way.



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