None of us knew anything about money

When I was a little kid, I didn’t know anything about money. All I know is that if I wanted something, I would say: “Mommy, I want this…” and sometimes my mother would buy it. If she didn’t buy it I would cry. After the crying, sometimes she would give in and buy it, sometimes she would stand her ground and not buy it.

When I was going to school, my parents would give me money to buy stuff in the cafeteria. Usually, the greasy stuff that kids continue eating today.

I grew up in Colombia. I remember that when we used to get out of school, there were mango vendors with delicious mangos, I always wanted one. This was my greatest need for money.

I asked some of my friends if their parents ever thought them anything about money. ALL of them said “no.”

Kids envy

I was a privileged kid. My parents were well off. My parents gave me everything I needed, but when I saw other kids with cool toys I didn’t have, I would cry with envy.

Some ideas to teach kids about money

1. When you go to the store, give the kid the money to give the cashier. This will show him/her about the exchange of a product for the money. Unfortunately, this doesn’t work well with credit cards.
2. Give the kid the opportunity to earn some money, maybe by helping out with cutting the grass, or shoveling snow.
3. Give your kid a piggy bank, that way you can show him/her the value of saving.

Don’t buy your kid’s love with money

My father had lots of money but he was never present. I used to love him because every time he came back home he had gifts for everyone. After I grew up. I realized that he was not a great father. He was focused on himself, on his money, on his work. We were neglected. I would have preferred to be poor and have a father than to be wealthy with no father.

My father cheated on my mother and he was never around. He compensated for his cheating and his absence by showering us with gifts and money. Not a great lesson for a kid

I wasn’t a great father either. My girlfriend and I separated shortly after she gave birth to a wonderful baby girl. The mother moved to another state, far away, with her new husband, and my life circumstances prevented me from visiting my daughter. Now my daughter is an adult. I feel that I should make an effort to get closer, but I just haven’t.

Lessons to learn:

1. Don’t cheat on your partner. Your kid will think this is normal and he will cheat on his partner in the future. Unfortunately, I have cheated on my partner. Thank’s for the great example dad.
2. Don’t buy your kids love with money or gifts. Be present! Your kid will prefer your company and love rather than a new toy.

Money management for kids

Allowances

My mother used to give me allowance money. No strings attached. The money was food in the cafeteria.

• Don’t give an allowance for free. Make your kids earn it. Since an early age, they have to be responsible for something. This will teach the value of earning money in exchange for some kind of value.

Extra money for kids whims and desires

When kid hit their teenage years, they become more independent. They want new gadgets, the computers, the designer clothes, the cool shoes, the concert tickets, they begin to ask for higher tick items.

At this age, it’s good to tie money with some kind of performance. If you get good grades you get this. If you help out doing this, you get that.

Teenagers hustling for money

When I was 14 years old. My father went bankrupt. He separated from my mother and we went from wealthy to poor.

At this time in my life, I learned how to hustle for money. I washed a few cars, I cut some lawns, I painted some houses.

If your kid has any entrepreneurial inclinations make sure you encourage him/her as much as possible. You can learn more by being an entrepreneur in real life than by taking many university courses.

Extracurricular activities

Sports activities can get very expensive, especially if your kid is talented. Those hokey, football, soccer practices plus the trips to one event or the other can really add up. In my opinion, if I could afford all those activities, I will go for it. Pay for all the piano lessons and the ballet practices the kid can absorb. It’s a great investment. On the other hand, be tight-fisted with frivolous spending. The branded snickers, the fashionable skirt. Your kid will learn that spending on positive things is allowed and spending on another frivolous thing is discouraged.

Your kid gets his/her first job.

This is the best time to teach your kid about investment. As much as parents think that talking about sex and drugs is important, talking about investments is just as important. If you teach your kid, as soon as he/she gets their first job, about the importance of investing. If you create the habit of making them save at least 10% of their earned money, and if you teach your kid about low-cost index funds, ETFs, and Tax-Free Savings Accounts, your kid is in his/her way to financial success.

I started investing in my early 30s. If I would have started investing when I was 18 or 20 or 22, I would be a millionaire by now.

Going to university.

This is a crucial moment. School is expensive. Recently I met a girl who came to Montreal with her parents to visit McGill University. As an international student, she was facing $18,000 CAN per year expense. The other consideration was an ivy league school with a price tag of $70,000 per year. I don’t know how there was anything to think about. Obviously, those parents were not teaching about the cost of education to their daughter and obviously, the girl didn’t have the least consideration for her parents. There was a lot to learn on both sides.

During this time period, parents should teach their kids about the cost of education, how to get credit, how to get scholarships, how to borrow money, how interest rates work and how to avoid them.

Don’t sacrifice your retirement for your kid’s education

If you have the money to contribute towards your retirement and the education of your kids, go ahead, help out or pay tuition and other related expenses in full.

If you don’t have the money, there is nothing to think about, you don’t have the money. End of the story. Don’t get into debt to pay for your kid’s education.

If you only have money to pay for education or to fund your retirement, but not for both, don’t sacrifice your retirement to pay for your kid’s education. Sure, the greatest gift you can give your kids is an education, but it shouldn’t come at the expense of your retirement. Your kids will have many options. You, as an older person, you will not have so many options.

Related article: Should you save for your kids’ education or for your own retirement

Don’t spend money on your kid’s wedding

You might have read my previous article about my opinion of big weddings. I try to discourage them. Instead, I try to encourage small, intimate weddings, for the least amount of money possible. The average cost of a wedding is about $30,000. I think that’s ridiculous. If you want to help out, please don’t give more than $1,000. If your kids want a big wedding, let them pay for it.

After your kid becomes an adult

There comes a time when your kid becomes an adult. At this moment, you are supposed to be there as an adviser, but please don’t become your kid’s savior every time he/she runs into financial difficulty. By being that savior, you will be harming more than helping. If your kid gets into debt, giving them money will not solve the problem, there are bigger issues that he/she have to learn on their own.

Also, keep in mind that after your kid is an adult, he no longer is your responsibility. Don’t jeopardize your retirement and your financial well-being for your kid’s. Some help is always nice, as they help my mother gave me once by contributing to the down payment my first property, but constant help is harmful.

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3. Saving for your kids’ education or your retirement?

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