What did your parents teach you about money? My mom taught me how to add in my head so I could comparison shop at the store and get the best bargain, how to stretch food to feed a family, and how to set up a budget as well as how to balance a checkbook. These are basic financial lessons, and I am glad that I learned them; many of my peers did not.
However, there was a lot my mom couldn’t teach me, such as how to save for retirement, because she felt that she would never make enough money to save adequately. She did not begin saving for her retirement until her early forties.
What I Hope to Teach My Son
My son is only seven, but I hope to teach him quite a bit about finances, specifically, those things I never learned.
Teach him to save for retirement early. When my son is a teenager and gets a job, I plan to teach him about retirement and the power of compounding interest. I plan to open a Roth IRA for him and put some of his earnings there. If we have the money, I may match his retirement savings, up to his $5,000 yearly contribution, assuming he made that much in a year.
Teach him to save for what he wants. This lesson has already begun, and in just a year he has become much better at it. Right now his favorite hobby is reading books. He just went to a book fair that he has been saving for the last few months. He knew I would give him five dollars, but he needed to come up with the rest; he saved $15 on his own.
Teach him to work for what he wants. We bought a Dave Ramsey Financial Peace Junior set for my son, and we have been working through the material. Before the set, my son was notorious for whining and begging for money. Since he has been listening to the CD set, he has now started to ask for extra chores he can do around the house to raise money. Just this change makes buying the Financial Peace kit worthwhile!
Teach him to look for a less expensive alternative. As I mentioned, my son loves to spend his money on books. I am hoping to eventually teach him about less expensive alternatives such as Paperback Swap and using the library. He does use the library extensively, but right now he wants to own the books he loves the best. Still, there are plenty of ways to own books without paying the full price. I want to show him how much further he can stretch his money with smart purchases.
As parents, we often do the best we can. My mom educated me about finances in the way that she knew best. I am grateful for that because I still use some of the frugal strategies she taught me. I hope to teach my son about the benefits of saving and retirement at a young age so he can make smart financial decisions throughout his life, which is the best path to financial security.