I will keep up the tax posts later this week with a new post this Wednesday. I reached out to my Twitter community to see if anyone wanted to share a guest post and Jacqueline Mann from richerwithpets.com reached out! What I really like about the topic of Jacqueline’s post is the theme of educating our children to be more responsible with their finances. On to her post:

The best way to start out financially healthy as an adult is to start as a child. Here are 10 things your child should know about money before the age of 10.

  1. Money doesn’t grow on trees. This American euphemism means that money doesn’t just come naturally and plentifully. Money will not always be around when we need it unless we plan ahead. Children get money by earning it either through chores or grades, receiving money as gifts, and earning interest on investments. Some children earn money through jobs outside the home – such as lemonade stands or operating a Youtube channel. Regardless of how it’s acquired, it doesn’t just flow into our hands whenever we think about it. So, children need to appreciate money and learn to make decisions about what to purchase. They can’t buy everything they want right away.
  2. Save 10%. If children learn this when they are young, it can be second nature when they are older. If 10% seems like a lot with a small amount of money, it will be harder to set aside 10% with a large amount of money as an adult.
  3. Children should learn to appreciate the feeling that comes with helping others financially. Giving helps children appreciate that we live in a country that takes care of citizens who are experiencing hard times or special needs – such as the disabled with Medicaid, the elderly with social security, newborn babies with WIC, and the food-insecure with food stamps. Giving can help children learn that it’s ok to receive when they are in need themselves.
  4. Receiving interest increases wealth, but paying interest takes away wealth. This is a precursor to understanding the downfalls of debt and the benefits of investing. If they borrow $1 at 10% interest, then they have to pay back $1 and a dime. They have less than they started with. If they lend that same $1 at 10% interest, they earn money just by lending it out. It’s better to be the lender and not the borrower. This lesson helps them to see what will really happen when they sign up for the credit card they don’t need while in college.
  5. Taxes are a part of life. Taxes pay for the education of most children in this country. Taxes help pay for libraries, doctors, police officers and firefighters. Taxes are not a bad thing. Children don’t think about taxes when they save up $100 for a new gadget or even $5 for a treat at a store. But they get a rude, discouraging surprise when they find out that their saved up funds are still inadequate. Go ahead and explain that while we should appreciate paying taxes because they benefit society, once they become adults, they should be careful not to overpay.
  6. A spending plan is your friend. Teach them what a budget looks like. Help children plan ahead and set goals. These habits keep kids from spending money on a whim then regretting it later. Teach them to sleep on their spending decisions (also known as delayed gratification). Children can set a certain amount of money that they consider to be “expensive.” Then if they want something above that threshold amount, they have to sleep on it for 1, 2, or 3 days. Decide beforehand how long the waiting period should be. If they still want it after sleeping on it, then they can get it. (This is a great idea that many adults use as well).
  7. Compound interest prepares us for the future, and it requires time to work well. So, start early. Children should know about the stock market by age 10. They will soon be listening to the news, if not already, and they will hear stock market reports. Children should know that money multiplies itself generally over time, and the sooner they begin, the more money they will have in the future. Setup custodial investing accounts for your children, whether mutual funds or college savings plans and check it from time to time.
  8. More education can lead to higher income. Children should know that people who go to college earn more than people who don’t go to college. Without college, students can still earn a nice living in the fields of entertainment, real estate investing, and areas that are more skill-based such as photography or music. So, they don’t need to be discouraged. Young scholars just need to make these decisions while fully-informed so they can go through life with as few regrets as possible.
  9. Children have a part to play in paying bills. Let children see the bills. Ask them for ways they can help to keep the cost of living low. Children can be resourceful with electricity and water, which helps keep the utility bills low. Children can also be resourceful with school supplies, toys, etc. so parents have money to spend on other things kids want. Take children to thrift stores and show them the difference between purchasing gently used versus new clothes. They may choose secondhand items if it means money can be spent in other areas that they would enjoy.
  10. Children can accept or reject marketing and advertising efforts. Teach children that advertisements are meant to depart them from their money, so appreciate the spending plan. It will keep them from losing all their money. It is a good practice to turn down the volume when commercials play and use that time to go to the bathroom, have a short conversation, or grab a snack. I had a discussion with students in which I pointed out that certain commercials for kids come on the Disney channel while they watch TV, but commercials about life insurance or grownup topics don’t come on nearly as frequently. It helped them realize that commercials are designed to target their brains because kids have decision-making power and companies realize that. So, use your young brain to decide wisely.

Jacqueline Mann is a teacher who paid off $54K in 3 years.  She did this by learning how to manage money and make huge sacrifices, including living in a car for 14 months and living without her beloved dog for 3 years. She now writes about savings, debts, and pets on her new blog richerwithpets.com.

Comment: Which concepts have you already taught your child? What do you think should be on the list?