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Teaching Tool 1 Notes on the Group Presentation

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Teaching Tool 1 Notes on the Group Presentation

    Teaching Children Financial Responsibility

    Teaching Children Financial

    Responsibility

    “As the twig is bent, so the tree is inclined.”

    - Anonymous Proverb

    OBJECTIVE

The following are important objectives for parents to remember in teaching children:

1. Teach by example

    2. Teach the importance of paying an honest tithe and generous offerings

    3. Teach family members early the importance of working and earning.

    4. Teach children to make money decisions according to their capacities to understand.

    5. Teach family members to contribute to the total family welfare.

    6. Teach family members that paying, not avoiding, financial obligations is part of having

    integrity and being honest.

    WHY?

President Hinckley shared a story in General Conference several years about planting a

    thornless honey locust shortly after he was married. After planting the tree, and an

    occasional watering, he largely forgot about it for several years. Years later he noticed it was

    leaning to the west, misshapen and out of balance. He attempted to straighten tree but could

    not and so, in desperation, he cut off a heavy branch which left a huge scar on the tree.

    The lesson he taught was this, “When the tree was first planted, a piece of string would have held it against the forces of the wind. I could have and should have supplied that string with

    ever so little effort, but I did not. And it bent to the forces that came against it. Children are

    like trees. When they are young, their lives can be shaped and directed, usually with ever so

    little effort. Said the writer of Proverbs, „Train up a child the way he should go: and when he

    is old, he will not depart from it‟ (Proverbs 22:6). That training finds its roots in the home.”

    (Gordon B. Hinckley, “Four Simple Things to Help Our Families and Our Nations,” Ensign,

    Sep 1996, 2.)

Parents, in accepting the responsibility given them to teach their children, should also

    remember the counsel given by Elder Joseph B. Wirthlin that “Too many of our youth get

    into financial difficulty because they never learned proper principles of financial common

    sense at home. Teach your children while they are young. Teach them that they cannot have

    something merely because they want it. Teach them the principles of hard work, frugality,

    and saving. (Joseph B. Wirthlin, “Earthly Debts, Heavenly Debts,” Ensign, May 2004, 40)

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    Teaching Children Financial Responsibility

    By following the counsel to teach children the importance of financial responsibility, both parent and child will be able to enjoy the blessings and freedom that come from obedience to the commandments of God.

ESSON (10 TO 20 MINUTES MAXIMUM) L

    When teaching children financial principles, parents need to adapt the lessons to the age and understanding level of the children. For purposes of this discussion, we have divided lesson objectives into three age groups:

? Young Children (0-8 Years)

    ? Pre-Teens (8-14)

    ? Teenagers and Young Adults (14-19)

Young children

    Children don‟t have a good idea of what money is until they start to want something and they

    hear mom and dad say things like, “no, we don‟t have enough money for that”. In order to

    teach young children financial principles, parents must first be aware of and evaluate their own actions to determine whether or not they are teaching their children the basic concepts of financial management through example.

    We suggest focusing on two basic principles to teach to children in this age group. The first is to set and achieve goals. Children‟s goals can pertain to a number of different areas besides finance. It is very appropriate for young children to set goals in school or in their junior sports leagues, etc. The second principle is to save for things they want. When kids have to work and save to obtain things, they learn to value those items more because they understand the labor and discipline that went into the purchase.

    Pre Teens As children enter the pre teen years, they become aware of pop culture and shopping to achieve social acceptance. With so much advertising and pressure for pre teens to buy all of the cool things, it is essential that they learn sound financial principles and establish the habits that will help them avoid the more costly money mistakes in the future.

    We suggest that parents focus on teaching their pre teen children three main financial principles. The first principle is to save and pay themselves second. When children learn to save and pay themselves a portion of their earnings at an early age, they automatically spend less because they have less to spend.

    Secondly, parents should teach children discipline and frugality. This principle includes teaching children the difference between wants and needs, evaluating value of a purchase, and shopping for best prices. Many Americans buy what is in front of them with very little discipline in their purchasing, and they find that they cannot make more valuable purchases later on. Children who learn financial discipline will avoid those problems.

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    Teaching Children Financial Responsibility

    Finally, we suggest that parents teach their children that there are a lot of things more important than money. As parents have to work longer hours in demanding jobs to earn enough to keep up with their insatiable spending habits, family members become estranged. The overall message become that money is more important than family relationships, personal health, religious worship, etc. Lessons taught through example are most important. Teenagers and Young Adults

    Teaching financial principles that incorporate things important to teenagers can make it easier for teenagers to be excited to learn about financial principles.

    Parents should discuss with teenagers and young adults four main financial items. First, the costs associated with driving and owning a car. Driving becomes a central part of most teens existence and their budding independence. Prior to receiving their driver‟s license, parents

    should discuss with their children the cost of gas. They could have a teenager make a list of the main places they drive and then compute the gas costs associated with those trips. Parents should also talk to their child about insurance costs. They could arrange for their teenager to talk to an insurance agent about coverage and costs associated with having an accident. Teens should also be taught about car maintenance. Help them learn how to change the oil in their car and other basic self maintenance skills. Discuss with them how much those same services would cost if taken to a professional shop.

    Secondly, parents should continue building on the childhood lessons of savings. Help them understand the different vehicles for cash management. Assist them in opening the appropriate accounts. Have young adults deposit a certain amount of each paycheck into their account and compute the amount of interest they make off that deposit as opposed to just holding the cash outright.

    Third, teenagers and young adults should be taught early the importance of avoiding debt. They could be given the opportunity to have a limited balance credit card. Share the benefits of how having a credit card helps them build credit which will help them down the road, but that it is also dangerous if not used in the right way. Figure out the interest rates on a credit card and demonstrate the danger of interest accumulation. Encourage them to always pay off the entire balance on their card.

    Finally, teenagers and young adults should be taught about budgeting. While still in high school and living at home, we suggest having your child prepare a weekly food budget for the family and then go to the grocery store and purchase the planned items. Teenagers can also learn appropriate budgeting techniques through clothing purchases. Together decide how much money is available for clothing and then if they desire more, help them work to finance those purchases. We also suggest assisting them in creating a budget for eating out and allow teenagers to make decisions on how often they eat out and at what price. Lastly, when the time comes, make a list of all the expenses that come from living on ones own. Include college expenses, such as tuition and books. Set up a mock budget with future students before they head to college.

Above all, spend a few minutes discussing the families‟ finances each week in family home

    evening. Parents could discuss 1 Nephi 8:13 (Vision of the Tree of Life) and the

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    Teaching Children Financial Responsibility

“temptations” and “midst of darkness” that arise that keep us from reaching our goals, or that

    which is “most joyful”. Each of the above suggestions can be adapted to specific family and

    individual needs. The earlier children begin focusing on these important principles the better

    prepared they will be for their future.

CTIVITY (10 MINUTES) A

? Set a family savings goal. Decide to save up together for a new TV or trampoline and

    have everyone contribute.

    ? Create an annual all-day “living in the real world” experience to help children understand

    what types of expenses they need to prepare for.

    ? Play a “Town Game” using fake money

    ? Identify symbols and metaphors that kids can relate to (i.e. credit cards are like fire or

    debt is like being enslaved)

    ? Establish a rewards system for kids positive contributions to the family‟s wealth.

    ? Use the “pay the bills” FHE activity (January 2008 Ensign Visiting Teaching Lesson)

    ? Pick a neighborhood family to serve to help your kids develop gratitude for what they

    have and hopefully notice they won‟t need all of the “latest and greatest” expensive stuff.

    ASSIGNMENTS

Have each member of the family write down specific financial goals for the next week and

    the next month. Have them write down a few objectives for how they will reach these goals.

    Have each member also indicate how reaching these goals will make them happy. Make sure

    to have them report on the goals at a Family Home Evening the next month. Help younger

    children earn money by providing small job opportunities around the house that they can do

    for money. (Make sure they pay the Lord first!)

One of the best ways to teach children about the importance of managing finances is by

    example. Your children may not know much about how you manage finances, and likely

    will only learn if you share it with them. For younger children it would be wise to share a

    story about how good and bad financial decisions have affected you or the family. Share a

    financial principle you had to learn on your own later in life, and explain how learning it

    earlier could have improved your financial standing or habits.

    OPENING AND CLOSING SONGS

    “Count Your Blessings” Hymn #241 “Teach Me to Walk in the Light” Hymn #304

    OTHER RESOURCES

    One for the Money: Guide to Family Finance by Elder Marvin J. Ashton

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    Teaching Children Financial Responsibility

    TEAM MEMBERS

    Candice Copple is from Gilbert, Arizona. She has an undergraduate in Accounting and will soon complete her MPA degree at BYU. She has seven years teaching experience.

    Ben Hartsock is from Bartlesville, OK. He is working on his JD/MBA at BYU and is married with one son.

    Chris Peterson hails from the small town of Fallbrook in sunny Southern California. On the verge of completing a master‟s degree in public administration, Chris plans on making a career in city management, most likely in Texas or North Carolina. The topic of teaching personal finance to children has particular significance to Chris as he and his wife are already the parents of three strapping boys.

Jimmy McKnight is from Nephi, Utah. He served a mission to Rome, Italy, loves BYU

    sports, golf, and is planning a career in local government.

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