Dean Brauer was 12 years old when he got his first job. Every Saturday morning for four years, he worked from 8 a.m. to 12 p.m. at his family’s mattress factory. One of his responsibilities was to fold textiles to prepare them for the assembly line on Monday. While that aspect of the job was repetitive, he says it was also rewarding.
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“It was really hard,” Brauer says. “But the thing it taught me is how hard it is to earn money. The first day after work I thought to myself -- that was really hard to earn the money I just earned. Wow! I better start appreciating money a little more and understand the value of it.”
Brauer’s first job was one of the events that inspired him to educate the next generation about money. In 2012, after realizing there was a void in the marketplace, Brauer and a small group of friends and parents started gohenry. The debit card and app with parental controls has over 600,000 users in the U.S. and U.K. It was created to help children build good money skills.
“You learn as a young child to read, you learn to write, you learn arithmetic, you learn to play sports, you learn music," says the co-founder and executive vice president of gohenry. “But often there is a very important life skill that’s left out, which is learning about money. Learning to be confident with money. Learning to budget it and learning how to save and spend responsibly.”
Brauer says it’s never too early to start talking to your child about money.
“Research has shown that money habits are formed at a very young age, as young as the age of six,” he says. “Parents are the biggest influence on a child’s money attitudes and habits when it comes to learning about money. With your 4 year old, you can start talking about coins and cash. With your 8or 9 year old, you can start introducing them -- under a parent’s control -- to electronic forms of money.”
Brauer says there are four ways parents can help their children build good money habits:
An allowance is an important part of how children learn about earning, budgeting and managing money. Brauer says there are no hard and fast rules on how you should give your child an allowance. He says it’s up to families to decide how much and how frequently they want to give.
“Earning is learning,” Brauer says. “That’s teaching kids about earning money through tasks or part-time jobs that help them understand the value of money and what it means to work and earn."
Remain firm on the weekly or monthly amount you decide to give your child. Make it clear with them what you expect the money to go towards.
When Brauer was 12, he began receiving an allowance from his parents. He was instructed to use the salary from his part-time job for the things he wanted, while the allowance would be used for whatever he needed. His needs included things such as clothing, snacks after school or transportation to attend sporting events. Brauer’s parents left it up to him to manage his expenses.
“That was actually a really hard and good lesson,” he says. “I was given an allowance that seemed like a lot of money to me because I never had been given a lump sum of money before. In the first month, I spent it all. When it was gone, it was gone. I had to figure it out from there. Very quickly I learned how to budget.”
An important part of saving is setting short-term and long-term goals. Brauer says varying goals will help keep your child motivated, while also enjoying the journey.
“If your child is 11 years old, there’s no sense in having them only save for their university fund or a first car,” he says. “That’s going to take a long time and it might demotivate them. But it’s important to have long-term goals so that they are working to something really big. In addition to long-term goals, set short-term goals they can frequently hit so that they feel proud about it.”
As your child reaches each goal, Brauer says parents should make a big deal about it and celebrate the wins with them.
A key part of saving is also teaching your kids how to do it smartly. You should have them allocate a percentage of their allowance every week to savings.
“Not so little that it’s insignificant, but not so much that they don’t have anything to spend,” he says.
Children can be taught the difference between wants and needs at a very young age. Brauer says it’s important to give your child choices and help them develop their own understanding of money, coached by you.
“Wasting $10 when you are 9 years old is a much better lesson than $10,000 at 18 when you get your first credit card,” he says. “Allow them to make a few mistakes here and there. But obviously, give them advice. Help them understand that there are consequences when they get things wrong. Try not to interfere too much, but put guardrails in place to help guide them so they can make some choices.”
Take advantage of learning moments with your child when you can. Brauer recalls at age 16, his father gave him the financial literacy book “Rich Dad, Poor Dad.” At the time, the teenager says he wasn't thrilled he had to read the book. Looking back at the experience, Brauer it was one of the three events that inspired him to start gohenry. He says the book taught him many lessons such as the importance of delaying gratification, investing in yourself first, acquiring assets instead of liabilities and living within your means.
Children are naturally empathetic. Brauer says parents can help structure that empathy into a lifelong habit of generosity and giving. Starting at a young age, speak to your child about the importance of making charitable contributions, both with their time and money.
“One of the ways to understand the value of money is what it means to give to those less fortunate than yourself,” he says. “Money doesn’t grow on trees and it’s important to understand that it can be used to help other people, not just for your own wants and needs.”
Brauer encourages parents to apply the four money lessons to everyday family life. Talk to your kids about paying bills. Explain to them where your money comes from and how much it costs to run the household. When your child is a teenager, get them more involved with family finances. Allow them to help you to choose the best cable package, purchase a new television or make decisions about the family vacation. Most importantly, rather than bringing in all of the stresses of adulthood, keep all of your conversations about money positive.
“It’s not necessarily about teaching your kids to be wealthy, it is about helping them to build confidence and independence to learn about money,” Brauer says. “Learning how to manage it and save it, so they can live within their reach.”
Linda Bell joined FOX Business Network (FBN) in 2014 as an assignment editor. She is an award-winning writer of business and financial content. You can follow her on Twitter @lindanbell