What Kids (and Adults) Need To Know About Money

Some of the richest parents in the
world knew how to teach their
children the value and the care of
money. Billionaire J.D. Rockefeller Jr.
gave his young children, fi ve sons,
only 25 cents allowance per week. Any
other money had to be raised by the
children. They all worked hard. One of
the children, Nelson, made money by
raising vegetables and rabbits. All of his
sons were required to keep personal
daily account books. They were required
to account for all their money, give
10% of it to charity and save 10%.
Their account books always had to be
balanced and at a moments notice they
had to be able to tell what happened to
every penny. Nelson went on to become
Vice President of the United States.
Another brother, David Rockefeller,
became Chairman of the Chase
Manhattan Bank. Later he reminisced
and said, “We all profi ted by the
experience – especially when it came to
understanding the value of money.”
We can all learn a great deal of the
inner workings of one of the world’s
richest families from this story. First
of all, they valued hard work and the
money they earned from it. Second,
they also valued their ability to give the
fi rst 10% of their earnings to charity.
Third, they knew the importance of
saving and investing 10% of their
income. And in the process of keeping a
journal, they also learned the power of
accounting for every penny.
The Rockefellers knew that, even
outside of any spiritual considerations
you may have, it makes sense to give
to charity. What goes around comes
around. You really do help to make a
better world by what you give away
to the less fortunate, the sick and the
uneducated.
They also knew that it is imperative
to save and invest some money. It’s a
common cliché, but it is true that most
people don’t plan to fail they just fail
to plan. Many people also erroneously
save from whatever is left over. The rich
learn early to save fi rst and then live on
whatever is left over. That really is one
of the reasons why they became rich in
the fi rst place.
However I think one of the best
lessons to learn here is about keeping
a personal account of your spending.
This one activity accomplishes many
things. First, it forces you to examine
each purchase, to reconsider it and
possibly make a better choice the next
time. Second, it records your purchases
forever so you can go back and
reference them at any time to hopefully
get a better price in the future. Third,
it lets you see at a glance where you
are spending money or where you are
spending too much money. Fourth, it
helps you plan future purchases. The
farther ahead you can plan the better
price you should be able to get. Think of
airline tickets as an example. And finally
it also lets you examine how much you
are paying in sales taxes over a year so
you can try to legally minimize that too.
Some ways to do this are to purchase
by mail order or buy second-hand from
private sources.
One of the easiest ways to track your
money is with a simple multicolumn
accounting ledger book that you can
pick up for several dollars at any
business stationary store. The book
should have a column for the date,
another for the description, and a dozen
or so columns to record expenses in
categories.
One typical record book might have the
following categories:
1) Income
2) Charity
3) Savings & Investments
4) Taxes
5) Clothing
6) Shelter
7) Food
8) General Household
9) Fun
10) Auto
11) Insurance
12) Debt payments
13) Business Expenses (assuming
you have a small business)
This is an especially good type of
bookkeeping system for children or
adults who dislike budgeting and
can’t face the tedium of recording
every expense in scores of different
categories. This system is quick and
simple and because it doesn’t reside
on a computer, it can be accessed in a
second. Most daily transactions can be
entered in a couple minutes.
This is also a great system for couples
to use because it puts the spending
on paper so they can scrutinize
each other’s expenses. It is a great
accountability check.. It might seem a
bit irritating at fi rst to have your partner
checking your purchases, but few
things are a more effective deterrent to
reckless or unnecessary spending.
Teaching these things to children will
enable them to develop good money
habits early in life. Using them as adults
will help you live better on less money.

Scrooge