On this episode of Financially Naked: Stories from The Financial Gym, our host is Level 2 Certified Financial Trainer, Randi DeGraw, based in New Jersey. She is joined by one of her clients, Eileen, to sit down and talk about one of their favorite topics, teaching kids about good financial habits early on. Both Randi and Eileen have children. Eileen's son, Sebastian, is nine years old and Randi has two kids. Harper who is four years old and JJ, who is six. Today, they discuss how and when to get started, books to read with your kids, and different tools you can use to get them excited about financial literacy.

Podcast Notes

• Children learn the most about money by observing their parents, especially if other discussions aren't being had.
• Have intentional conversations and let them watch you.
• Eileen talks about her family dynamic growing up. One parent had a gambling addiction and the other had a spending addiction. She learned how to rack up credit card debt and ended up filing bankruptcy. After her divorce, she only had $347 to her name and had to figure out how to manage money quickly.
• This is a huge motivating factor in teaching her own son. She wants him to build a great relationship and habits with money, even before he starts working. The goal is to teach valuable lessons and set him up for success in adulthood.
• Money is a vital part of how we operate in the world. Teaching kids early isn't about them being obsessed with money, just how to have a healthy relationship with it.

WHERE TO GET STARTED

• Start the conversation with money in general. Kids start learning about money in kindergarten or first grade, and you can build on what they learned with real coins at home.
• Get them involved and excited. Eileen and Sebastian built a money bank from a DIY Home Depot kit. There was wood, nails, and paint. He was so excited to build it. He also has a wallet to keep his cash organized.
• Read books about money together, there are great ones for kids.
• Teach them the concepts and allow them to make age appropriate decisions. The supermarket and dollar store are great places to start with young children.
• Sebastian got excited about money around age 8, though the smaller conversations started earlier.
• Letting kids spend their own money is one of the best learning tools.
• Make money a fun and enjoyable topic

ALLOWANCE

• When Sebastian was young, the allowance started at $1 per week. We'd go to the dollar store and he was able to use the money he saved to buy what he wanted.
• A real allowance started at age 8 for Sebastian and it is a mix of cash and debit. Each Thursday is payday and they go over the spreadsheet together so he can see where the money goes.
• Eileen uses the app Greenlight and there are many great features!
• There are weekly chores for the base allowance, but opportunity to make extra cash doing extra chores such as vacuuming the car or helping rake leaves.

WHAT EILEEN & SEBASTIAN FOCUS ON

• They talk about savings goals: giving, sharing, and spending are all savings goals on the Greenlight card.
• When it comes time to take money out and spend it, Sebastian will look at the price and say, 'That's too expensive! I'm not buying that.' He gets it!
• Compounding interest! They talk about investing and she opened a Fidelity account for Sebastian. Right now, she deposits $25 a month and will contribute until he starts working. Starting early is the key.
• The importance of not always trying to keep up with the Joneses
• He is 9 right now and he is currently saving for a car. The goal of this is to show him how these little steps over time make a huge difference.
• He sits with her when she updates her portfolio and they dive into investing then.

FUN STORIES

• Eileen jokes that Sebastian tells stories about being in school and knowing all the answers to the money questions. The teachers are always surprised!
• They did an Instagram live together where he asked to be interviewed. He loved it and wants to be partners in teaching others personal finance with his mom.

FINAL THOUGHTS

• Starting this process is all about setting time aside to do it. It can be hard to get started, but the habit is built over time.
• The best way to teach is through real life. Put the money in their hands. Talking and books are great, but they learn the most by actually doing it.
• There are always ways to make it fun and enjoyable. Do what works for your family and your kid's interests.

If you want to work with a trainer to improve your financial health or talk through teaching your children about money, book a complimentary consultation today!

OTHER RESOURCES:Greenlight: An app designed to help parents teach kids about money Danny Dollar Millionaire Extraordinaire and the Lemonade Escapade - by Ty Allan Jackson Rich Dad's Escape from the Rat Race - Robert Kiyosaki

Connect With Eileen:

Email: [email protected]

Meet The Trainer

Randi DeGraw, Level 2 Certified Financial Trainer