Friday, March 7, 2014

How to Make Money Management a Family Affair

Baby Step # 3

Why is it important to take this Baby Step?

Most people don't talk openly about money. We are raised to believe that talking about money is rude, embarrassing or boastful. But where has this belief gotten us? Without open discussion, money management often becomes a mysterious and difficult task.

Our children learn from our example. If we behave as though money management is painful, secretive, or confusing, we thwart our children's financial future. Is this what we want for our children? Of course not. We all want our children to acquire the tools necessary to power their own future financial independence and freedom.

Involving the entire family in financial discussions has many other benefits as well:
  • Few high school students graduate with any formal personal finance instruction. Children receive the majority of their financial literacy from their parents.
  • Modeling healthy personal finance behaviors is THE key to raising money-savvy children.

  • Money is a sore topic for many families. Open discussion benefits our family relationships.

  • When the entire family is on board, keeping to a budget becomes easy. The family shares a creative, problem-solving energy and everyone feels empowered.

  • Kids often think “outside of the box” better than adults do. They will surprise you with their remarkable insights and ideas.

  • Teach your child to save and invest now and you'll take full advantage of the astounding magic of compounding. To accumulate $1 million by age 65, a 5 year old child only needs a one time contribution of $9875 OR a monthly contribution of only $57. Click here to learn the details.

  • Learning about money can be fun when it's a family project. Spend some of your family financial meetings playing educational money games. See my list of suggested games below.
Grab your family calendar and schedule a “Money Monday” or “Finance Friday” or whatever works for you and your family. Block out an hour each month. Choose a time that everyone is likely to be relaxed, well-fed, and free from other distractions. Consider making this a festive occasion- serve homemade cookies, offer a contest with prizes, or hold your meeting in a tent pitched in your backyard.

What can you do during your family finance meetings? Here are a few suggestions:
  1. Make and review your Treasure Map.

  2. Review your values and priorities, particularly as they relate to money.

  3. Check my list of Baby Steps for ones you haven't taken yet and subscribe to receive future ones as I publish them. Delegate tasks to each family member as appropriate. Discuss the results of your completed Baby Steps.

  4. Brainstorm ways to spend less. Caution: Avoid blame and guilt trips! Instead, offer incentives and prizes.

  5. Play games that increase financial knowledge and skills. Here are a few suggestions to get you started:

    MoneyWise Kids (Game, Manufacturer Recommended Age: 7 - 99 years)
    Payday (Game, For 2-4 players, Recommended Age: 8 - 12 years)
    Cashflow for Kids (Game)
    Disney Monopoly (Game
    , For 2 to 6 players, Ages 8 to adult)

  6. Employ your kids. Give them a wage and valuable work experience for doing extra work around the house. Discuss budgeting and assignment of income into various categories, such as: 10% invest / 10% save / 10% charity / 70% spend.

  7. Brainstorm ways to increase your family income with an in-home business. I started my first business at age 12- a petsitting and dog walking service.

  8. Invite your child to shadow (observe) you at work.

  9. Invite a mentor or entrepreneur to dinner and conduct an interview. Learn from those you'd like to emulate.

  10. Discuss ways your family can give back to your community. Volunteering not only serves others, it offers your children valuable work experience.

  11. Read books out loud. Suggested titles:

    Alexander, Who Used to Be Rich Last Sunday (Paperback, Reading level: Ages 4-8)
    Money Sense for Kids (Paperback, Reading level: Ages 4-8)
    Growing Money: A Complete Investing Guide for Kids (Paperback, Reading level: Ages 9-12)
    A Smart Girl's Guide to Money: How to Make It, Save It, And Spend It (Paperback, Reading level: Ages 9-12)
I recommend these related books about raising happy, money-savvy kids:
Kids and Money: Giving Them the Savvy to Succeed Financially (Paperback, 272 pages)
How to Raise Millionaire Children (Paperback, 115 pages)

Questions for my readers: How do you feel about sharing your personal income with your children? Do you have any other family-friendly books or games relating to personal finance that you'd recommend? Do your kids receive an allowance?

Did you miss a step? Want to learn my recipe for success, happiness, and a million dollars? Start here: Baby Steps to Financial Freedom.


  1. I don't feel comfortable letting my children know how much money I have. I was a student at a very expensive private elementary and middle school. Most of the students had rich parents who knew their parents where rich. I was only able to attend because of financial aid from the school's generous owners. My classmates were never modest about the money they had and I definitely felt left out while they discussed their expensive vacations or toys.

    I don't want children that are boastful, rude, or think they are better than others based on the amount of money I have. I want them to understand that they have to work hard to get to the place they want to be.

    Although I pity them, it is interesting that those classmates that would pick on me because I was poor have been in and out of rehab and many of them have not become successful.

  2. I need to teach my daughter that money doesn't grow on trees. Thank you for these great tips.

    Also,thank you for submitting this to the Carnival of Family Life. Your post will be included in the July 30th edition.

  3. Learning about budgets and finances was one thing that was taught well to me when I was growing up, and then I got a job in a bank straight out of high school and 5 years of working in banks and seeing how people manage their money was very useful.

    Seriously, when you work in a bank, at least back then, you are handling people's complete financial records when you are preparing their statements with the cheques they wrote over the month.