Why It Is Important to Teach Your Kids About Money
By Danny Kofke
My 7-year-old daughter, Ava, recently showed me why teaching children about money is so important, even if we think they may not understand all that we are talking about. Ava just finished first grade last May.
During Ava’s last week of school, her school had Awards Day for the students. Ava got a gold medal (it was real gold according to her) for excelling in all academic areas. Not many of her peers obtained this, so I was very proud of her for working so hard at school.
The next morning, on our way to school, I told Ava how proud I was of her and started to discuss the importance of good grades and why it is important for her to continue to give her best effort. I know college is far off, but it will be here before we know it. I told Ava that if she continues to do well until she graduates from high school, she will have more options on where she can go to college. I told her that a college might even pay for her to attend their school.
Ava then said, “That’s called a scholarship.” My mouth about dropped to the floor—we were on to something here. I then went further and explained that if she did not get a scholarship, she could still go to college but will probably have to work or get a student loan (Tracy and I do invest for her and Ella’s college but will probably not have enough to cover the entire tuition ourselves). I went on further to tell her that once she graduates and gets a job, she will have to start paying this loan off.
Ava then said, “I will actually have to pay more than the amount the loan was for.” Now I was really in shock. I asked her how she knew this, and she replied, “Most people don’t just give you money for free—you have to pay them more since they let you borrow it.”
At this point I did not know what to say. My 7-year-old knows more about student loans than many college freshmen do.
When I got to school, I called my wife, Tracy, to let her know about our conversation. It turns out Ava and Tracy had a similar conversation the day before, and Ava gave me the information they discussed. This is what Oprah refers to as an “A-ha” moment.
We discuss money topics with our children as often as we can. We talk openly about how much I make and the bills that we have. I know some of the things we talk about are over our daughters’ heads, but this conversation showed me that maybe we don’t give them enough credit and that they actually understand more than what I think they do. As a teacher, I know we don’t teach enough financial skills to our students. If you are a parent, it is so important to begin teaching your children about money when the opportunity presents itself—you never know the impact it will have.
Danny Kofke is currently a special education teacher in Georgia. He is also the author of two books: How to Survive (and Perhaps Thrive) on a Teacher's Salary and A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money. To learn more about Danny, please visit DannyKofke.blogspot.com.