They're 5 and 3, so we've only recently been able to head above water and started thinking less about sleep and more about how to be more proactive. We've already seen the good and bad habits (overwhelmingly good, I must say) they've picked up from their friends at daycare and school. A recent study by Jessica Neal at Michigan State seems to suggest that kids pick up personality traits from their peers… so I'd like to help urge them in the right direction!
That's why Beth Kobliner's new book, Make Your Kid A Money Genius (Even If You're Not): A Parents’ Guide for Kids 3 to 23, comes out at a good time for us. We've recently made the “reactive to proactive” transition with our kids and started researching how we can help ensure they learn how to manage money intelligently and not join the large percentage of Americans who have little saved for their retirement and massive credit card debt.
About Beth Kobliner
Beth Kobliner is a personal finance expert who has done quite a bit in the area of financial education. Most notably, she was part of President Obama's Advisory Council on Financial Capability and helped create MoneyAsYouGrow.org, which was adopted by the Consumer Financial Protection Bureau. If that site sounds familiar, I did their Money as You Grow Book Club last year with our son and shares the experience of reading nine of the listed books.
The 14 Rules
Kobliner starts the book out with fourteen rules about how to talk to your kids about money. These rules are about the approach to a conversation, not the subject of the conversation, and they're things you learn if you speak to a lot of children. Ideas like “use anecdotes” (#3) and “Never fib about how much money you have on you” (#6) are things you realize over time, but having a list is a powerful reminder.
Also important are the 7 things you don't need to tell your kids – like your salary and who makes more. Like many things in life, it's about balance and finding that balance of inclusion and exclusion is very difficult. I find that the best approach is to share enough to include your children in the decision process without sharing so much information that they get lost or fixated on the details.
The Framework of the Book
Here's where things get interesting – the book is structured not based on age but based on money management concepts. Saving, debt, spending, insurance, etc.
In each chapter, there's discussion on how to approach the concept at each age group. I flipped through each chapter so I could read through the Preschool and Elementary School sections in detail, while giving a peek towards Middle School and beyond.
The Preschool sections are really about teaching awareness. In debt, your goal is to teach your preschool kids that buying stuff costs money and you can't always get everything. As you'd expect, it's not about interest rates, credit card debt, or anything like that – but it's about how there's a limited amount of resources and you have to make choices.
The Elementary School sections start introducing bigger concepts like time, security, and instructions for parents too (ie. don't give your elementary school kids a credit card!)
As kids get older, you can introduce them to more concepts but obviously these aren't hard and fast rules. We know that some kids read at 4 years old and others read at 5 and others don't read until they're much older. Our son was born in August and he's in the same kindergarten class as other kids who are going to be nearly 20% older. So the frameworks are loose but that's good enough.
What I Loved
As someone with relatively good money skills, this book was a good fit because it created a framework for teaching money lessons.
As I read through each chapter that applied to our kids and looked ahead to the ones that they'd soon face, everything made sense. More importantly, it creates a checklist. I can't remember everything and a framework makes it so I don't have to. I can focus on passing on the lessons.
It was also great in that it told us what was probably OK and what probably wasn't, at each age group. While you could figure this out through trial and error, having that framework provides a solid anchor.
I think that when our kids get older, this book will be a great tool. I skipped ahead to the section on auto insurance and shudder at the thought of our kids driving one day!
What I Wish It Had
I wish that there was a section that walked you through, conceptually, how money should be discussed with your children at the various ages. I recognize that my 3 year old isn't going to understand amortization or interest rates, but what will she understand? Will she understand that saving money today will mean she has more to spend tomorrow?
I took psychology in college and was amazed at concepts like object permanence (part of Piaget's theory of cognitive development), where kids don't believe a thing continues to exist after it leaves their line of sight until about two years old. Our brains are continually developing and research has shown that it's fully developed until your mid-20s, which includes the prefrontal cortex… which is responsible for executive functions like assessing risk and long term planning.
Overall, I'm a fan and if you're wondering how to teach your kids about money, I'd suggest giving this book a try.
I was provided a complimentary copy of the book to consider for a review but no other compensation (and I don't review every book I receive). The thoughts and opinions of this book are my own.