8 Financial Myths to Discuss with Your Kids

by Jason on October 20, 2010

Kids and Money

Teaching kids about money can be a tough task to tackle.

Learning about budgeting, financial planning, saving money and generally maximizing your dollar is a lot of information to digest.

What’s even more complicating is dispelling money myths that could end up confusing your little penny pinchers on their road to financial literacy.

So where should you start when teaching kids about money?  Financial myths is a great place.

Here are eight financial myths derived through common sayings and phrases dispelled:

1. Money Can’t Buy You Happiness

While the meaning behind the phrase is well-intentioned, it is inherently false. Money can definitely buy you happiness.

Happiness comes in the form of financial security, a home for your family, education for yourself and your children, the ability to retire and so forth.

Just make sure that you don’t confuse happiness with empty instant satisfaction from shopping splurges or impulse buys.

[Note from Jason: This is a good point.  Money can buy happiness up to a certain point, but just remember, it is not the ultimate in terms of providing deep-lasting satisfaction.]

2. Curiosity Killed the Cat

This is one of the worst notions about personal finance out there. You have to make your kids understand that it’s okay to ask questions if they don’t know something.

Curiosity breeds knowledge. If you don’t ask questions, you’ll never learn anything more than what people tell you.

They may be confused about how credit cards work or why you save your money in a real bank instead of a piggy bank. The sooner they ask, the sooner they’ll learn.

3. Money is the Root of All Evil

As an adult, this adage seems a bit silly and off base. Money isn’t evil. It’s greed that drives people to do bad things.

If you abolished the concept of money, people would still do the same bad things because of greed. The only thing that would change is the physical currency of what they desire.

If we went back to an economy of bartering goods, that wouldn’t stop shady dealers from trying to rip-off unsuspecting customers.

Don’t teach your kids to fear and avoid money. Teach them not to be greedy. Embrace success–it’s absolutely fine to want to earn more money.

[Note from Jason: Actually, one of the most misquoted verses in the Bible is 1 Timothy 6:10, which says,

For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.

It’s not money that is evil, it’s our love for it.  Ever wonder what Jesus might say to Gordon Gekko?]

4. Money Doesn’t Grow on Trees

OK, yes. This isn’t really a myth since money doesn’t literally grow on trees.

However, money does grow through investments and interest on good savings account rates.

Teach your kids how to make more with their money. It’s important to teach children to not be wasteful with their cash, but also making them aware that being shrewd with it is just as important.  Read this article to get ideas for your teen to make money.

5. A Penny Saved is a Penny Earned

Technically, depending on your tax bracket, a penny saved could be as much as a penny and a half earned.

Money saved is actually worth more because it isn’t taxable. If you were to save $10 on a discount or coupon, you’d keep the full $10.

If you were to go out and earn $10, Uncle Sam would take anywhere from 10-35 percent of that, and your state and social securities would take their shares, too.

6. Good Things Come to Those Who Wait

This isn’t necessarily the case when it comes to taking control of your finances. You may keep waiting to pay off your debt, or you might keep waiting to save money, invest in retirement or so on.

The longer you wait, the more you lose in interest earned on savings or accumulate interest charged on debt. Take action and control as soon as possible.

7. There’s No Such Thing as a Free Lunch

This is a very cynical take on how the world works. There is, in fact, such a thing as a free lunch. For example, if you earned $10 on a credit card cash back rewards program just by buying things you were going to buy anyway, that could be considered a free lunch.

Many businesses use free promotions and programs that entice consumers to use their products or services. By taking advantage of these perks in a strategic and disciplined way, you maximize your dollars.

8. If at First You Don’t Succeed, Try, Try Again

It’s important to understand that when it comes to finance, if something is not working or if your budgeting plans aren’t effective, you may need a new approach.

Don’t be afraid to use different methods, strategies or inspirational and motivational devices until you find what works for you. If something isn’t working, it isn’t working. Don’t quit, but don’t just keep doing the same things over and over again.

This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates.

This post was included in the Carnival of Wealth hosted by Personal Dividends, and the Carnival of Financial Planning at the Skilled Investor

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