Hope for your financial life and beyond

4 Guiding Money Principles that Every Child (and Adult) Must Learn

Please welcome my good friend and Certified Financial Planner (CFP®) Shannon Ryan from The Heavy Purse as she guest posts today.

word learn engraved in stoneWhen I was 13 years old, my father began giving me “money lessons” while we ate dinner, and I had no idea how these simple lessons would change my life. He didn’t focus on how money worked, but instead he showed me how my emotions affected my spending habits and money beliefs. With his guidance, I changed how I viewed money – from lack and fear – to one of abundance. Most importantly, I learned how to make financially confident decisions that aligned how I used my money with my goals and values. It felt great.

It wasn’t until college that I realized what a special gift my father gave me. Many of my friends and classmates had not been taught how to handle money wisely. Money wasn’t discussed in their homes, so they learned by trial and mostly error. I wanted to help them and became a Certified Financial Planner (CFP®). For the past 22 years, it’s been my honor to help families and individuals reclaim their money happiness.

How Money Habits and Beliefs Are Formed

One trend I noticed repeatedly was that many of our money habits and beliefs formed when we were children, not adults. We observed how our parents handled money and mimicked them, inheriting their money hang-ups along the way. We then grew up to pass these same hang-ups to our children, continuing the vicious cycle.

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Moving Back In With Your Parents at 50? It’s Happening A Bunch

moving back in with your parentsHave you ever thought about moving back in with your parents? This past weekend the LA Times published an article detailing the number of Californians age 50-64 who are doing just that. You heard that right. Middle-age adults (and their kids) living back at their parent’s home, perhaps occupying the same bedrooms they had as teenagers.

The big details of the study are this:

“For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development. That jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents…”

It’s not all that uncommon for adult children to live with aging parents. My aunt has been doing that for years with my now 100 yr. old grandfather, and it’s been a beautiful situation for the family. This arrangement most often happens because of a health issue or the desire for the elderly parent not to end up in a nursing home. So, parent and child come together again in a single home and the child serves as caregiver in their parent’s later years.

According to the study, these middle-age kids are moving back in with their parents because of hard economic times. They lost their jobs as the economy collapsed and are now finding it difficult convincing employers to hire them. They have exhausted their savings and simply have nowhere else to turn.

Questions on Moving Back in With Your Parents

I have all sorts of thoughts and questions after reading this news:

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Teaching Kids About Money: 4 Age Appropriate Lessons

teaching kids about moneyA major role of parenting should be teaching kids about money. For many reasons, parents drop the ball in this area and raise children who carry an improper understanding of money into college and adulthood. This leads to challenges as the grown children seek employment, earn an income and determine how to manage their financial lives.

What children should learn about money varies depending on their age. A five year old needs to hear different messages from the parents than does a teenager. However, there are three fundamental money lessons that every child needs to learn no matter what the age:

1) to save money for future needs,

2) to spend money wisely and

3) to give generously.

These three principles serve as the foundation upon which other money lessons build.

There are differing opinions about when to start teaching kids about money. Many say kids as young as three can start to learn the basics. In our home, we waited to get serious with money lessons until the age of five. We found that our children understood the concept of giving at an early age but struggled with saving and spending. By the age of five they were better able to grasp those last two concepts and understand their importance.

Teaching Kids About Money at Various Ages

Aside from saving, spending and giving, what should children learn about money and at what ages? Here are the four big lessons we are hoping to impart as we are teaching our kids about money:

Money Lesson #1: Enjoy It (Ages 5-7)

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