4 Practical Money Skills You MUST Teach Your Children

Joseph Meyer
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How to Make Change.

I have a friend who is very fond of his 1983 Toyota Celica convertible. One day, he started his car and the muffler fell off. He didn’t want to leave his car in the garage with the muffler lying on the concrete floor, so he pulled it underneath the car.

His daughter later came outside to find the car running with a thick cloud of toxic-smelling smoke pumping out of it, and she asked, “Daddy, why don’t you turn the car off?” It was because her father didn’t know what the word “change” meant. He had only a handful of quarters in his pocket and didn’t know how to get back into the house and get some coins.

This is an extreme example, but it illustrates how important it is to teach your children practical money skills. If you don’t, this lack of knowledge can get them in all kinds of trouble.

How to Balance a Checkbook.

Even today, I am amazed that I was able to get my kids to balance their checkbooks. Every month, I would write out the check that was already in the checkbook for the money they had to have for the date that was already in there. By the time they were teenagers, this would drive them crazy. The banks were closed and they didn’t want to wait until the next morning to write the check. So it finally came to a head.

I said, “Well, the bank stays open ….” I showed them the bank book to prove that technically, they could write the check. But they had to see how much money was IN the bank in order to write the check. It was a simple trick…a way to get them to go to the bank first to see if they had the money to write the check. And it worked!

But I think the only reason they bought the argument was because my logic was simple. If I had tried to be cute and fibbed and said that they could write the check from the book…without seeing how much money was actually IN the bank, they would have known. And they would have shut it down right there.

How to Pay Bills.

Many people pay bills online, either from their bank accounts or credit cards. If you pay bills online, you decide when to pay and what bills get paid. The problem is that if anything happens to your internet connection, your bills still go out at the same time. Even if you're paying by check, you still have a 24 to 48 hour delay from the time you mail a payment. That means you have a window of time between when you make the payment and when the bill gets paid. If there's a problem with your checking account, it can lead to late fees or even a service interruption.

So, while you might think that paying bills online is fast, easy, and secure, it's a bit risky in the end. The safest way to pay your bills is to make a list of bills and services, pay the ones that have the earliest deadlines first, and then pay the rest. Make sure you do this on a regular schedule, so that you don't forget about a bill that falls on a weekend or a holiday.

How to Create a Budget.

For most Americans, money has been a taboo subject until now. Even though most parents have had regular conversations about sex with their kids long before the kids were married, conversations about money usually occurred only when it was time to give an allowance or to help with the family budget.

Growing up, I didn't have a money conversation with my parents until I was old enough to contribute to our family expenses. But if we want our children to be financially successful, we need to foster a money mindset in our homes from the very beginning. That means talking about money with them every day.

It also means that you need to start teaching money skills to your children before they are old enough to have a job.

Practical Money Skills are a Must

Life is getting more expensive every year and ensuring your children not only have money in their savings accounts, but understand how to live on it is vital. They need practical money skills as their daily lives change from home-cooked food, to packed lunches, to sitting down every night in the week to a proper family meal.

Practical money skills aren’t about telling your kids to spend less. In fact, anyone can teach that. Practical money skills are about teaching your kids how to save, how to budget, how to cook, how to bring extra money in. They’re about teaching your kids the value of money and they’re about teaching your kids how to live with less.