In this day and age, we give young people education opportunities
beyond compare, and yet one of the areas we
teach them virtually nothing about is money. What we do teach
them about money is often more of a liability than an asset.
Your children will need money knowledge simply to survive
in the money world. If they are going to thrive, our children
need a higher level of money knowledge than any generation
before, and yet, we send them out into the world often without
even the basics, like sheep to the slaughterhouse.
It has been my experience that when it comes to money,
there are only two types of people: savers and spenders. At
one end of the spectrum, the extreme savers hoard as much
of their income as they can. They find it difficult to enjoy
buying things they really want. Often they even feel guilty
about buying things they need. At the other end of the spectrum,
the spenders let money slip through their hands like
water. They seem simply incapable of resisting the impulse to
buy. All their purchases seem necessary and they often cannot
understand why they never have any money.
These are, of course, extreme examples, and there are people
at various intervals along the spectrum, but it is amazing
how extreme most of us are when it comes to money. The
irony is that savers tend to attract spenders in relationships.
Money is an opportunity to teach our children so many
valuable lessons about self and life. I would love to write a
whole book for you on this topic alone, but let’s focus here
on just a handful of the basics.
Last year, I was visiting my friends Pat and Laura in the
San Francisco Bay area. They have three wonderful children,
and when I arrived at their home, the boys were just getting
ready for bed. Their father was reading them a story, and
their mother suggested the boys would like me to say hello.
So I went into the bedroom where the boys were gathered
around their father. Looking around the room, I noticed
that the two oldest boys, Connor and Matthew (whose room
we were all in), each had three glass jars on their dressers.
Each jar had a handwritten label stuck on it. The first
read savings, the second read spending, and the third
After Pat had finished reading them the book, he kissed
the boys good night, got them into bed, and turned out the
lights. Later that evening when we were out at dinner I asked
him about the jars. I was intrigued by them. He explained
that when the boys are given money, either for doing a chore
or in a birthday card from their grandma, they divide it between
the three jars. Ten percent for charity, 10 percent for
savings, and the rest for spending. What a powerful way to
educate children about money. It is so disarmingly simple,
but consider the lessons.
First and foremost, these boys are forming powerful
habits. Any person who saves 10 percent of his or her income
is sure to live in relative financial security and independence
sooner or later. The average American saves less than 1 percent
of his or her income (outside of retirement contributions).
Children are never too young to learn the habit
They are also forming the powerful habit (and virtue) of
generosity. By allocating 10 percent of their income to charity,
they are learning to give to those in need and to causes
they believe in. This lesson makes them aware that there are
a lot of organizations out there doing good things for people
in need. At the end of each quarter, they decide which charity
or charities to give their money to. This provides another
powerful lesson: that you cannot give to them all.
These are important lessons, but this exercise also teaches
them to enjoy spending. In my own life I have always found
it difficult to spend money on myself. I can buy things for
other people without batting an eyelash, but I struggle to buy
things that I really want for myself. I am more inclined to
deny myself and save that money. In recent years, I have
started doing something similar to what the boys do.
Namely, allocating a certain percentage of my income to
spend. I can spend it on whatever I want as long as I don’t go
over the allocated amount. This has freed me from the guilt
that has often prevented me from enjoying the money I have
earned. The boys’ third jar is marked spending. They can
spend their money on whatever they want, and in so doing,
learn the valuable lesson that life is about the allocation of
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