Teaching your children the fundamentals of money and fiscal responsibility are pretty simple, find out how by watching this video “how to teach your children about money”.
This video features a discussion between a host and Mike Peterson, the “Debt Guru,” on how to teach your children about money management. The core argument centers around the idea that starting financial education early, around age eight, is crucial, and that simply giving an allowance isn’t sufficient. Instead, Peterson advocates for tying allowances to chores, creating a direct link between work and reward. This approach, he argues, instills the value of a dollar and the importance of hard work.
Peterson emphasizes the importance of teaching children about budgeting and financial responsibility. He suggests assigning children age-appropriate expenses, such as piano lessons or sports activities, ensuring their earnings cover these costs and leave some discretionary income for personal spending. This allows children to experience the consequences of their spending choices firsthand. He uses the example of a couple who showed their children their paychecks and then paid their bills, highlighting the stark difference between gross income and what’s left after expenses. This visual demonstration effectively illustrates the realities of budgeting.
A key component of Peterson’s approach is incorporating savings into the children’s budget. He suggests treating savings as a “fixed and mandatory payment,” similar to a mortgage or car payment for adults. This helps children understand the importance of saving for future goals and investments. The conversation also touches upon allowing children to make their own spending choices with their discretionary income. While this might lead to impulsive purchases initially, Peterson believes it’s a valuable learning experience. He suggests letting children experience the consequences of spending all their money, understanding that they might miss out on something they wanted because of their choices. This, he argues, is a far better lesson than facing financial hardship later in life.
The overall message is that proactive financial education from a young age, involving work, budgeting, savings, and experiencing the natural consequences of spending choices, is essential for children to develop healthy financial habits and avoid future financial difficulties. The video concludes with contact information for Mike Peterson, encouraging viewers to seek further information on his website, debtguru.com.