I love whenever anyone’s best tips for raising money-smart kids. However, Kiplinger’s Personal Finance Magazine holds a special place in my heart. I’ve been reading Kiplinger’s since… well, I was a kid. My mother subscribed to it and I was interested. She had explained compound interest to me a long time ago. Back in those ancient days of around 1988, banks paid a real interest rate – around 7-8% if my memory serves. I had some money saved from my paper route and first job at Papa Gino’s Pizzeria, so it seemed like a good idea to learn more about investing worked.
A lot of personal finance is now online (such as this site), but I’ve been a Kiplinger’s subscriber since around college. You can get a couple of years of it for around $40, which is a great deal compared to the cover price of a whopping $6.99. I’m all for recognizing the value of financial advice, but that’s a lot of money for 72 ad-filled pages of often out-of-date information. It shows how difficult the print world is nowadays.
Today, I’d like to cover Kiplinger’s tips for raising money-smart kids, which was spread out over two issues last year. Specifically, I’m talking about Janet Bodnar who runs the Money Smart Women column. Fortunately, the column covers some fathers who have tips about raising money-smart kids too. Personal finance should be something the whole family can be a part of. My family is a real-life example of it… I just happen to have a crazy obsession.
Part 1: Kiplinger’s Tips for Raising Money Smart Kids
In the first article, Janet Bodnar covers What Kids Need to Know About Finances. She’s literally written the book Raising Money Smart Kids, but to be fair there are more than a few books with that title.
The article makes a point that high-net-worth women have jumped into estate planning due to COVID. These families with a lot of money want their kids to know how to take care of it. Maybe we fit that profile too. However, I’m far from the stage of worrying about how my 8 and 9-year-olds are going to manage money years from now. I simply want to help them have a foundation now rather than be disappointed later. It’s what I know and what I’m passionate about, so I might pass that knowledge on.
The article continues that the two most important things to teach are spending and saving. I agree, especially for young kids. Older kids have more opportunities to focus on earning more and investing. That said, I believe that schoolwork comes first, so earning more has to be “work smarter” rather than “work longer/harder.” At least investing can be very quick, setting up an automatic investing plan can be done in just a few minutes.
The next tip was to have younger kids use cash and let older kids use an ATM account attached to a bank – avoid credit cards. This tip is reasonable. Although, I should mention that my kids have been authorized users on my Amazon card for a few years now. They have no idea about it and wouldn’t know where it is or how to use it, but it will help them earn credit whenever they need it.
The final tip was that young kids don’t need to know about the family income. I think that’s obvious. Young children are still learning place value and numbers like hundreds of thousands simply don’t make much sense.
Part 2: Kiplinger’s Tips for Raising Money Smart Kids
As a follow-up to that article, Bodnar shared some reader tips on raising money smart kids.
One reader shared a “parent matching” strategy. That’s where a parent will reward a child for saving with more money similar to how a 401k match works at many companies. Another reader made it simple, “Live below your means.” Finally, one reader stressed the value of saving over earning, because you pay taxes on money earned.
Some readers disagreed with the above tip about not giving kids credit cards. Like me, one reader wanted their children to establish great credit at a young age. Another reader required kids to pay it off in full every month. I love that last tip as it builds a habit and establishes the importance of it before the kids are on their own in college.
Finally, Bodnar recommended two books for helping high school students with investing, The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of and How to Turn $100 into $1,000,000: Earn! Save! Invest!. For younger kids, I have my own opinion on the best book to teach kids about money.
Aside from books, I would add a podcast for teens, NPR’s Planet Money’s Summer School on investing.
I found all these reader tips (along with Bodnar’s book recommendation) better than the original article. Over both articles, there are plenty of good tips – definitely worth a few minutes of your time.