My 4-year-old is just starting to grasp the concept of money and how it works. She loves to watch the “pay girls” (cashiers) at the grocery store, and she loves to play with a cash register at home while pretending to be a cashier as I shop in her store.
She also likes to ask questions about the coins and bills, and I’m doing my best to help her learn age appropriate things about money.
Overall, I’ve been pretty good with my money since I’ve become an adult, though I’ve absolutely made some mistakes along the way.
I’ve never had credit card debt, but I’ve had my share of couch/bed/car/boat loans. There are definitely some mistakes I wish I could take back, and ones I don’t want to see my daughter make. I hope she can learn from my own personal missteps as she grows up.
Here are 7 financial lessons I want to teach my daughter so she can have a good relationship with money and a secure future.
1. No One Cares What You’re Driving
When I talk to my daughter about growing up and getting bigger, she frequently asks me if she’ll be able to drive one day. Something about the idea of driving gets kids excited from a very early age.
They have no idea that when they become an adult and actually have to pay for the car, its repairs, the insurance, the gas, and regular maintenance, how ridiculously expensive it is to own even a single car, yet most of us have two per family. We pay a lot of money to have our cars!
It’s hard when you’re in high school and you see the kids whose parents bought them the nicest, newest cars available. (Seriously, who does that?!) My parents gave me my mom’s old car before I “upgraded” to my grandma’s old car, and I never thought twice about it.
I was 16 and simply glad to have a car! It was a privilege, because some of my friends didn’t even get cars, and I didn’t have to pay for mine. I felt lucky.
I refuse to be one of those parents who buys their child a brand new car for their sweet sixteen. If my child isn’t happy with a used, reliable car that I pay for, then I’ll gladly remove it from her possession. She’ll be lucky to get a used car.
When you become an adult, you realize no one cares what you’re driving anyway, so spend your money on more worthy endeavors instead of spending hundreds of dollars per month to drive around town in something shiny and red. Again, no one cares what you’re driving.Want to make sure your kids don't make the same #money mistakes you did? Teach them these lessons: Click To Tweet
2. Go to The College Offering the Most Scholarship Money
I very much want my daughter to attend college, so I’m going to urge her to keep her grades up and apply for every scholarship she can find.
My best advice is to go to the school that offers the most scholarship money so you can enjoy your time in college without debt. Several thousand dollars worth of student loan debt isn’t a great way to start a new career.
I chose to go to a state school because they offered me the biggest scholarship award. It wasn’t my first choice, but it made the most financial sense, and it was a great school. Today, I’m so glad I made that choice.
3. Track Your Spending
The first time you track your money is a very eye-opening experience. While you may think you’re a great saver, when you realize you spend way too much money on small purchases like coffee and convenience store items (or whatever your vice is), it’s humbling.
Track your money so you know where it’s going. If you don’t, you’ll have little expenditures everywhere and no clue where your paycheck went. It’s also the only way to learn how to start your first budget.
4. Open a Retirement Account Yesterday
When you get your first real job after graduation, retirement is like a tiny little speck in the future, one that hardly seems worthy of contemplation.
After all, there are bigger things to worry about at that time, like landing your next date or figuring out what the heck FICA is and why it’s taking so much of your money.
From a very young age, I want my daughter to know what a retirement account is and exactly how it works. In fact, I’ll probably try very hard to not be the mom who walks into her very first meeting with HR at her first job just so I can sign her up for one myself.
I’m not really going to be that mom, but I do wish she could open one now, at the ripe age of 4. But because I’m pretty sure that’s not allowed, I guess I’ll have to wait a few years.
5. Spend Less Than You Earn
It sounds like a simple idea, but for some reason, it’s one of the hardest things for people to learn. Don’t spend more than you make. You need far less than you realize. Save your money so you can make time for what matters the most — your family.
I know she’s going to make mistakes, and sometimes it will be hard for me to watch, but I have to let her make them. That’s how you learn.
Realizing how much I hated paying my own monthly car payments is what urged me to make some financial changes in my own life, and it’s the reason I’m completely debt free today, including my mortgage.
I have to let her follow her own financial journey so she can learn her own lessons, but I’m going to help her prevent any bad financial consequences that I can.
6. Marry Someone Who’s on the Same Page
There’s a reason why money is the number one cause of divorce today. When you’re dating, try to find someone who’s on the same page as you financially.
A guy who rolls up in a leased sports car is a big red flag. While people can change, it doesn’t always happen, and it can be hard to grow together if you both have different ideas about finances.7 great #money lessons to teach your kids for success in adulthood: Click To Tweet
7. Money is a Tool
I want my daughter to be successful, I want her to grow, and I want her to be happy. Money isn’t everything, but it’s definitely a tool. I want her to know money can’t buy happiness, but it can be used as a tool to get to where you want to be in life, whether that means getting to be a stay at home mom or even retiring in your 40s.
Spend it on what matters most to you, use it to your advantage, and you will do well.
Is there anything specific you want to teach your child about money? Did you parents teach you how to handle finances?