Are you in debt? Do you want to get out of debt? Do you have kids? One of the most important (and overlooked) ways you can ensure that you’ll get out of debt (and stay out of debt) is to teach your kids about money, saving, proper spending habits, and how to work for money.

I am the father of three little children, and for those that have kids, you’ll understand that kids are expensive. From food to clothes, entertainment to vacations, education to extra-curricular activities, and doctor’s bills to unexpected expenses… kids cost money (although, don’t get me wrong – they are COMPLETELY WORTH EVERY PENNY)! And as we all know, the older children get the more expensive they become and the more money they’ll ask for, require, and spend.

So how does teaching your kids NOW about money actually help you get out of and stay out of debt? Well, what happens when your child wants the candy bar in the store, the new bike for their birthday, the new car when they’re 16, the tuition check when in college, the ‘perfect’ wedding when they find that special someone, or the extra money during a crisis during their adult life? In many cases, what happens is dad pulls out the credit card and probably goes further into debt with each purchase along every stage of the child’s life.

Well, what if that child was taught to save, to work to earn the money for that new bike, to invest money (however small amount) at an early age to begin saving for that college fund, to put money aside into a savings or IRA account, etc.? You get the point, right?
So, let’s discuss the 10 most important lessons parents can teach their kids about money. And realize at the outset, that as important as it is for your children to understand and implement these principles, it is far more important that parents (YOU) understand, implement, teach, and exemplify them to your children.

1. Save 10%:

Get into the habit today to save 10% of every dime you ever earn! Put that money into a savings account, college fund, retirement account, emergency fund, etc.

2. Buy Assets Not Liabilities:

Teach your children at a very early age to spend their money on items that will make them money, appreciate, and create passive income.

3. Make Interest Work For You:

Teach your children the difference between good and bad interest. Open a college fund and retirement account TODAY for your kids, and teach them the principle of compounding interest. Start building their credit TODAY so they are charged as little interest as possible on the money they will borrow.

4. Consumer Debt vs. Good Debt:

Teach your kids now that there are only 3 things they should ever go into debt for:

1. Buying a house
2. Getting an education
3. Starting a business or buying an asset that will make them money

Notice all three such investments will, in time, make you money. Comparatively, borrowing money to buy consumer goods or depreciating objects is… STUPID! If you don’t have cash to buy such objects, don’t buy them.

5. Build Credit & Teach Credit Early:

Get a credit card for your child as early as possible. Yes, you read that last sentence correctly. Get your child a credit card, but of course you won’t let them touch it until they are 18 or even 21. All you do is make one small purchase every month, and then make payments on the card on-time and in FULL at the end of every month. Doing this for years will ensure you build a solid credit score and history for your child.

• Credit cards are a necessary evil in our day and age. Teach your kids how to use them properly. Credit Cards 101 teaches us: never spend more than 25% of the balance, keep the account open as long as possible, make your payments on-time always, and always pay off the full balance at the end of each month.
• Building credit is half the battle… protecting it is just as important. Invest in one of the best insurances – identity theft protection. Teach your children to protect their SSN, be careful about giving out their personal information to anyone (especially online), protect their wallets and important documents, never believe phone calls or emails asking to ‘update information,’ etc.
• To ensure that you stay out of debt and your child builds a solid financial foundation, teach your kids about building and protection their credit. Doing so will result in them receiving lower interest rates, saving more money, getting better jobs, receiving larger loans, getting a higher salary, etc.

6. Use Allowances to Teach (not just spend):

If you choose to give your children an allowance, require that they have to work to earn it, save and invest a portion of it, ensure they budget for upcoming expenses (whether they are needs or wants), challenge them to take a portion of it and try to make more money with it, etc. Foolish is the parent who simply hands over money and allows their child to freely spend.

• Ensure children ‘earn’ their allowance. Such is life isn’t it – nothing is just handed out, you have to earn it. Have them help around the house and yard, clean their room, take out the trash, mow the lawn, clean the bathroom, vacuum and sweep, etc.
• Then give them money, and ensure they budget for the things they want and need. Have them save and invest a portion of it.
• Let them control their own money and make their own money decisions LONG before reaching adulthood.

7. Make Opportunities to Teach About Money:

• Go to the bank and open a checking and savings account with your child. Teach them the basics about: withdrawals, deposits, overdrafts, fees, interest charged and earned, credit and loans, bonds, CD’s, IRA’s, etc.
• Next April, sit down your child and go over taxes. Explain why we pay them, how it works, how to budget for them, etc.
• Go over the family budget, and explain how income comes in and how you properly allocate and budget accordingly. Teach them to create and follow their own budget, documenting the income and expenses they have.
• Take them about grocery shopping, and teach them how to shop, about prices, about payment, etc. Have them help create the shopping list, and then ensure they stay within the budget. Have them help you gather coupons, and teach the value of saving and cutting expenses.
• Have them help you with your next online purchase. Teach them how to research products and shop around for the best prices, etc. Teach them to evaluate if a ‘sale’ is actually a good deal. Are alternative products available that will be better, perhaps for less cost, or offer a better value? Remind them that if something sounds too good to be true, it usually is.
• Teach them about how to be disciplined when seeing advertisements and not spend based on emotion or pressure. Teach them to properly analyze advertisements and sales, to not buy on emotion, to plan ahead and save, and not be influenced by consumer spending habits induced by advertisements. Impulse buying is a plague – teach your kids to be patient and to decipher between wants and needs.
• When you are a restaurant next, teach them about paying by credit and how that works. Teach them about tips, and how to calculate a tip, etc.
• Next month when you go to pay the bills, sit your child down and teach them how to budget for and pay for bills. Maybe you have a teenager who has a cell phone and drives one of the cars… well, in their monthly allowance, give them some money to help pay those bills (ideally they have to earn a portion of it too), and then teach them to be the one responsible for paying the monthly bills on the cell phone, car, etc. Are they budgeting for the gas and car insurance? Are they learning how to pay those bills, and are there consequences if they don’t pay or make a late payment (which you’ll teach them how that affects their credit, right?).
• Etc.

8. Teach the Difference Between Wants & Needs:

Our me-oriented culture has taught and shown us that to show love or appreciation for another person, we should buy them something. As a result, most children’s closets are full, toys are everywhere, new clothes are common, vacations abundant, and candy always accessible. And yet, so many children are still not satisfied and happy. Why? Because parents buy the ‘wants’ of their children not realizing those ‘wants’ still don’t satisfy the ‘needs’ being neglected. What children want and need most are: YOU, family, love, attention, time, affection, discipline, acceptance, and someone to love, laugh, and listen to them. Giving and teaching children what they ‘need’ is far more important than simply buying what they ‘want.’

9. Going Without & Being Patient:

Regardless of whether or not parents have the money to buy their children what they want, they would be wise to occasionally teach their kids the life-long important lesson of ‘going without.’ Now, I am of course not suggesting parents should deprive their children or withhold the basic necessities of life; rather, I am suggesting that the ability to wait and be patient, to sacrifice and go without, to work and to earn, to appreciate and be grateful, and to be content and even unselfish are characteristics and attributes, that if learned, will benefit them throughout life.

10. Eliminate the Myths About Money & Inspire Kids to Achieve Goals:

Money is not evil! Setting goals to achieve wealth is not evil. Money can be used for such good in this world. If parents can teach their kids to set goals and achieve wealth, and in the process ensure that they do not become selfish, prideful, judgmental, or condescending, then using money for the intent to do good is absolutely commendable.

• Inspire your children that they can become and accomplish anything. Their educational background, family heritage, racial characteristics, biological makeup, and uncontrollable circumstances should never be an excuse – they literally can achieve their dreams.
• Help them set and achieve their goals. Never let your personal circumstances, background, or decisions influence their belief in their own potential to accomplish their goals and dreams.
• And most importantly, if they do achieve their financial goals – teach them to always give, share, and help others.

Remember, that if you desire to get out of debt and stay out of debt, teach your kids NOW about how to save, invest, build credit, budget, and make interest work for them. Teaching children these essential basics about money will SAVE you money and ensure that your kids will not be financially dependent upon you in years to come, which will keep you out of debt. Teaching your children the value of money is imperative to their -and your – future financial success!