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Teaching Your Kids About Financial Literacy

Our special guest on episode 14 of our podcast “One Day You’ll Thank Me” was J.J. Wenrich - guest speaker, wealth manager & author of "Teaching Kids to Buy Stocks".

The focus of our discussion was about how to best support parents as they guide their kids toward making responsible financial decisions. According to J.J. Wenrich, father of three himself, parents should start educating their kids "as soon as they're old enough to stop putting coins in their mouths."

JJ says that you really want to start talking about money concepts as soon as they can understand:

"this is what money is"

"this is how you control your own behavior so you're not always out of money"

"personal finance and understanding household spending habits"

"we use money to trade for things we want, like Legos or groceries"

As they mature past the concepts, we want to help them develop an element of self control, and the feeling that they have choices in life - where money is related to a value and brings the conversation back to stuff they can relate to, like toys for instance.

Parents can start by making their kids more aware of how much things cost, such as when they go to the store and look at coveted items. And as kids are visiting stores and various businesses, parents can be talking about basic principles of supply and demand, markups, sourcing items, etc. Kids who have been raised in homes where parents own their own business sometimes have a different perspective, given what they've been exposed to.

We also discuss allowance that's distributed only after it's earned, being permitted to make decisions with their money (even if it results in them making mistakes). He shares a "challenge" that he once gave his children---if they could save $500, he would match it, allowing them to invest that extra money in stocks.

I find that in my family coaching practice, that often parents will encourage their kids to save, which is terrific. The problematic part is, the kid is saving their money and the parent is buying everything they want. They are missing the point of what delayed gratification and sacrificing is.

For most of us, there is something we need to give up to save and invest, etc.

He encourages parents to get their child a debit card at an early age, so they can experience that feeling of running out of money. This is a precursor for later credit card use. Many kids can't handle the lure of easy credit, and can really dig themselves into a financial hole. It's important to know your kids--their ability to delay gratification, peer influence, etc.

With our teenagers, we need to be very careful with credit cards, even avoiding them is a good idea quite often. There is the school of thought that by having a credit card and paying off the balance each month, it will help them create a healthy credit history and score. However, from what JJ has seen, typically the teen ends up hurting themselves rather than helping themselves and their credit score.

Topics to introduce to your kids:

compound interest, debt, competitive pricing, being a mindful consumer, spending vs saving, making decisions about investment ideas, etc.

To start the conversation around investing and buying stock, you can help kids recognize that businesses we use and go to, are trying to make money. And explaining that some businesses are private and some are publicly traded, and people have the potential to own part of the business. You don't have to buy one company, you can buy a basket of companies, such as a fund. If you need guidance on how to explain these concepts, you can ask a financial advisor to help explain it to your kids.

We also spoke about the need for women to value themselves and demand pay that reflects their skill and training, which is traditionally difficult for women to do (Anna negotiated higher pay after being asked to work on the podcast on a Sunday night). It is important to empower our girls.

Really the common thread throughout the conversation was to let your kids get their feet wet. Whether it be allowance, saving, debit card, and whatever is appropriate for their age.

Let them have these experiences (possibly mistakes) while they are young and when they get older they can do it from a more informed place.

Lastly, both J.J. and Tara urge parents to be mindful about how they communicate about finances as it can cause considerable stress in kids. We want to share with them examples from the family, but we do not want to share our stresses and place that onto them.

For more information:

Listen to the podcast with JJ, click HERE

Buy J.J. Wenrich's book from Amazon RIGHT HERE.

Visit J.J. Wenrich's website RIGHT HERE.

Please visit our Facebook page and Instagram page.

To learn more about Dr. Tara Egan, visit HERE.

To learn more about Dr. Tara Egan's therapy practice based in Charlotte, NC, visit HERE.

This episode is sponsored by Sparent, a company that "helps ambitious women create time to grow their amazing companies." Book your discovery call HERE to find out more. Mention this podcast episode and get one free hour of service.

If you'd like to try BARK, a dashboard that monitors content on your child's technological devices, please use the code QSG7JBW to get 20% off. If you'd like to try Circle Home Plus to set guidelines around when and where your kids spend their online screen time, use THIS LINK to get $20 off. I use both of these tools to protect my children.

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