What is that age-old expression? You can’t teach an old dog new tricks? When it comes to being smart with money, bad spending habits are extremely hard to break.
In a recent survey conducted by personal finance authority GOBankingRates, 57% of Americans have less than $1,000 in their savings accounts with 39% having absolutely no savings at all. With January being Financial Wellness Month, it's about time we take a look at ways that people can break this cycle.
Gregg Musset the CEO of the personal finance resource BusyKid, believes that this statistic could have been reversed a long time ago if only we helped our children understand their finances earlier on in life.
“The thing that I believe that changes the entire conversation” explains Musset, “is starting children early and teaching them two primary things: How to work and teaching them to be smart with money. Those two things are kind of it! Those two things can set them on a path that absolutely changes everything for a kid going forward into adulthood.”
He believes that by teaching your children about the importance of understanding the value of money and the work that goes into earning it, they will not spend frivolously or be reckless with their money. In his eyes, the best place to start is outside of the classroom.
“Schools, in most places,” he says, “are not teaching personal finance in any way. Sometimes they teach it in high school and when they do it it’s typically kind of more economics driven... To me, that’s like handing a kid ‘War and Peace’ and telling them to read it when they haven’t read Dr. Seuss.”
His company, BusyKid, is helping parents get their kids on the right track as it helps them to log in their children’s chores and calculate the compensation they deserve. Kids are given a charge card that parents can transfer allowance to just like a direct deposit. Just think of it like training wheels for dealing with an HR department.
Musset believes that by showing children these concepts that they will be able to learn from their mistakes early on so they won't have to go through it at a later age.
“If you ask me the best way to teach a kid to spend smart is by letting them do it.,” he explains, “If he transfers $25 to his card and goes to the toy store to buy a toy for $7.50 and it breaks the next day and he gets that buyers remorse flavor in his mouth... Perfect! That’s exactly what you want to happen so that he won't do it again.”
And that sums it up in a nutshell. If we want to motivate children to save and spend their money wisely when they grow up, they need to get a taste of what the world is really like early on.