The other day at the pool, my older daughter Lily asked if we could buy her some more pool noodles.
We could obviously afford to buy one, but we already had several and didn’t want more. My wife, Jun, went to her go-to excuse, “I don’t have any money, ask another day when we have money.”
Then Lily looked at me and asekd,
Daddy, can you buy more money for us?
She was floating on her yellow noodle in the kid’s pool with Jun and Ariana, my other daughter. I sat in the chair next to them working on an article.
I closed my laptop and thought about it for a moment. Kids often mean one thing but say another. What did she really mean with that?
I scratched my chin while thinking like I usually do, but I was stumped. I thought maybe she wanted me to go to work for more money. But, she already knows what it means to work, so she probably would have just said that.
Finally, I responded, “Honey, you can’t buy more money. That’s not really how it works”
She’s only 5, but she’s very aware of things. Seeing a teachable moment, my wife chimed in,
Honey, you have to work for money.
I immediately interjected.
That’s not true, don’t lie to the kids!
Now little Lily’s confused.
In general, we don’t intentionally disagree with each other in front of the kids. Children are like little sharks that can smell blood from 5 miles away. Once they sniff out a weakness they’ll exploit it for the next 10 years.
We were stuck now. Luckily, Lily jumped in to the conversation,
What about at the bank? Don’t you buy money there?
It clicked. She understands that you need to buy things at the store and she understands that you get your money from the bank. But, she isn’t quite experienced enough to understand how money gets into the bank, so she put it all together and assumed you buy money there.
Pretty smart for 5 years old!
But, the true moral of the story is this. As soon as a question about money arose, we immediately told our kids that the only way to get money is to work for it.
I’ve spent 3 years on the soapbox on this site and over at IdealREI.com preaching that working is the worst way to earn money, and that’s the first lesson we teach our kids.
What They Don’t Teach You In School
As you might remember, we recently dis-enrolled our daughter from public school because of their vision of creating workers. We believe that they should be mentally challenged to grow and learn, not be turned into a worker bee.
But what about money?
Money is such a taboo topic in most households. Parents don’t share anything about their income, expenses, budgets, etc.
Honestly, I get it. The last thing I want is for my kids to be going to school and talking about our finances. It’s such a first world problem anyhow, “my daddy’s horse farm is bigger than your daddy’s horse farm!” (Disclosure: I don’t own a horse farm.)
But, finances and money are so important to a child’s early development. If you want your children to NOT be slaves to money, they need to understand it, how it works, and how to manipulate it. Period.
I don’t have all the answers yet because my children are still pretty young, but I have a general idea of what I want to teach them as they grow older. Here are a few of those lessons.
Working For Someone is NOT The Only Way to Make Money
I remember the first time I read “Rich Dad, Poor Dad.” In it, Robert Kiyosaki explains that there are 4 core categories for income – as an employee, self-employed, as a business owner, or as an investor.
The goal is to take income from the E, S, and B categories and put it into the I category.
By teaching my kids about all 4 categories where they can earn money, they can more accurately plan their life out at a younger age.
Instead, they need to determine what they want to do in life, and figure out how being an employee, self employed, business owner, or investor fits into those life goals. Then they can choose the right path for them.
Money Doesn’t Grow on Trees (but it Kinda Does)
I’ve worked really hard for the money I have. I came from nothing. I sacrificed a lot in my life, my body, my relationships, etc to earn the money I have.
Money absolutely does not grow on trees.
But, it kind of does.
If you’re smart with your money and invest it wisely, money does kind of come from nowhere.
I want my children to understand that their body and time can create money through hard labor, or you can create money by taking calculated risks and investing properly.
Good investments are like seeds that sprout a lot of good trees…
Money trees, if you will.
Transparency is Important
Most people are very secretive of what they earn, spend, invest, etc.
I’m not. I teach my children that it’s important to talk about money, including your mistakes.
Some people see this as bragging (but only if you have more than them). Others see it as weird, or strange. But, I don’t care.
The fact is, hiding financial troubles leads to problems. It leads to people buying more than they can afford, hiding that fact, then facing foreclosure or bankruptcy with none of their friends knowing.
If impressing your friends is important, then impress them with a solid financial foundation. I promise they won’t be very impressed when your high spending ways leads to bankruptcy.
Instead, I’m going to be open with my kids about spending, investing, and earning. Hopefully, this will teach them to also be open and transparent.
What Do You Think Is Important to Teach Your Kids?
Would you teach them these lessons? If not, what would you teach them and why?