The Lesson that School Forgot

We spend a lot of time and money ensuring that our children reach adulthood knowing the 3 R’s, (reading, ‘riting, and ‘rithmatic) but less time—and way less money—making sure they hit the age of consent knowing the A-B-C’s of financial management.

A recent report by the American Savings Education Council stated that only a quarter of 13 to 21-year-olds credit their parents with having actively taught them how to manage money. Does this mean that the other three quarters of us have our heads in the sand?

If money is a stressor for parents, talking to kids about it can be difficult. Discussing how to invest, the use (and misuse) of credit, and practical savings tactics has become the 21st Century’s version of the previously dreaded “birds and the bees” talk. Only now we don’t talk about the stork, we just have magic cards that make the money come…and go.

In his courses, T. Harv Eker teaches that knowing something and doing something with that knowledge are very different things. “When the mind must choose between deeply rooted emotions and logic,” he says, “Emotions will almost always win.” Which is partly why he created the Jar System for managing finances. Having a system takes the emotional element out of saving, spending and investing money. From experience, Harv understands that our thinking can sabotage our best efforts and our feelings fail us when we attempt to manage our finances. This is why a good solid system succeeds.

Financial managers like Jayne Pearl, business writer and author of Kids and Money, know that systems that are effective for adults can be scaled down for kids. If you have a kid who's hoarding money, parents may think that's great,” Pearl told the Christian Science Monitor in an interview on financial management for children. “But if parents don't help them achieve a balance between saving and spending, that could create problems… Equally essential are lessons in the importance of charitable contributions.”

With almost sixty percent of North American families deep in debt and living from paycheck to paycheck, it’s obvious that more attention needs to be given to financial education for the next generation. We teach our children to count money in school as part of basic applied mathematics and our culture teaches them to spend. Somewhere in between, parents dearly hope their children figure out how to earn. But what about saving? Investing? Giving?

A New Kind of Allowance

Enter KidsWealth. In 1998, Michael and Elizabeth DaSilva were the proud parents of two young children, and the not-so-proud possessors of over $90,000 in debt.

They made a decision to turn their financial life around and hearing about the T. Harv Eker’s work they attended a Millionaire Mind Intensive in 2001. After adopting the money management methods of the seminar they were able to completely eradicate all their debt and achieve total financial freedom within five years.

Not wanting their kids to learn financial management the hard way, Michael and Liz got their kids using the Jar system. It worked so well, they developed the KidsWealth Money Program based on the same money management principles they had used to turn their own lives around.

Their own kids—aged nine and eleven—are walking, talking (and saving) advertisements for the program; each has over $9,000 in their “Wealth” (savings/investment) accounts.

One Family’s Success

Meet Janie and Ben. Six months ago, they gave the KidsWealth Money Kit to each of their three children, ages six through twelve.

The result? Janie says, "Going to the mall used to be a total nightmare. The whole time the kids would be whining for me to buy them stuff they didn’t need. Eventually I’d get so worn down by their badgering that I would give in. Then I’d get angry at myself for spending the money.” Not an uncommon dilemma for parents. A large part of becoming financially literate is understanding the concept of finite. The tricky part, especially in a consumer-based culture such as ours, is teaching that to kids.

“I knew I was modeling bad money management,” admits Janie, “But I felt helpless to stop.”

After the family started using the Millionaire Mind’s Jar System, they gave each child their own KidsWealth Money Kit. Janie recalls paying her youngest son Billy his Kid’s Pay (which replaced his allowance). In two days, his “fun” money was gone on toys and junk food. Janie stuck to the program, and every time Billy asked for something he saw at the store, Janie simply said “Yes Billy, how much do you have in your Fun account?” Billy knew he had no fun money left, but didn’t argue.

On his second Kid’s Pay day, Billy looked at his Mom and said, “You know what Mom? I don’t think I am going to spend my money as fast this month!”

Janie’s daughter, twelve-year-old Sarah says, “I used to spend my allowance as soon as I got it. Now I divide it into the five accounts. I add babysitting money too. And last month our school was giving money to an inner-city kids’ book program and it felt really good to be able to give from my Angel account.”

20 / 20 - The Perfect Vision

In developing the KidsWealth Money Program, the DaSilvas had a broader vision. It was the prospect of kids helping kids that inspired them to set up the KidsWealth “Angel Network.”

All kids who get the KidsWealth Money Kit program are automatically part of the Network. Every month, ten percent of the “Kid’s Pay” (allowance) is allocated to their Angel account to give to child-focused charities, local food banks, or to any foundation or society that helps kids in need.

The DaSilvas’ goal is to have 20-million kids from all over the world participating in the KidsWealth Angel Network by 2020. Starting with their own children, the Network is well on its way to changing the lives of millions of children all over the world.

Tips for Parents:

The program is simplicity itself. The only difference between KidsWealth Money Kit and the Jar System is that the “Necessities” Jar does not exist for children because parents or guardians pay for their children’s basic needs.

The “accounts” are: WEALTH – PLAN – LEARN – FUN & ANGEL.

All you have to do is figure out how much you currently spend on your kid’s wants (rather than needs) including their normal allowance and divide that amount in half. Half of what is normally spent on them becomes their “Kids Pay”, the other half is for you to spend on extras for them.

The best part about the program is that kids pick it up so fast that once they’ve learned to use it sound financial management often infiltrates the whole household. Most parents say that it’s hard to mismanage your money when your kid is saving diligently, giving generously, and spending prudently.

To find out more about the KidsWealth Money Kit: KidsWealth Money Kit