Outside the Box: The best financial gift for a young person is free

That was the conclusion from a survey published by Quicken, the maker of money-management software and provider of online services. Based on a survey of more than 2,000 adults, the company found that “People who learned about money as a child are three times as likely to have a personal annual income of $75k or higher than those who didn’t learn about money in their formative years.”

However, there’s a problem.  About a third of the adults  in Quicken’s survey said nobody taught them about money when they were children.

Good news: There’s a terrific solution to that problem. If you’re willing to teach your kids about money, there’s likely going to be a big payoff for them – and potentially for you as well.

Actually, whether you realize it or not, you’re already doing this teaching through your own example, good or bad.

Your kids can tell whether you spend money like a tightwad or throw it around as if $100 bills grew on trees.

If you’re struggling to pay the bills, they know. If you spend more or less than their friends’ families on stuff and vacations, they know.

But in order to give your kids a better financial future, that’s not enough. You need to actually talk about money.

Don’t panic. This is easier than you think.

Even a young child can learn that if you spend a dollar on one thing, you can’t also spend it on something else. It’s called making choices.

The best and easiest way to teach kids about money is through everyday situations as they arise.

And believe me, in most households, financial issues arise all the time:

• Can we afford that vacation, or not?
• If we need something, do we buy it new or buy it used?
• If something is broken, do we repair it or replace it?
• When we’re buying something, do we save up the money ahead of time or buy it on credit? And why do we make that choice?

If you address those issues without consulting your spouse or partner, you could be cruising for trouble. If you do it without discussing these topics with your kids, you’re missing a golden opportunity to enhance their future financial well-being.

The Quicken article gave some tips:

• Be aware that you are always teaching by example;
• Start talking about money concepts early. By age 7, kids have already formed habits and attitudes;
• Talk about money often – you’ll probably find a natural opportunity just about every week.

I have a few ideas of my own to offer.

Perhaps the granddaddy of all financial skills is the ability to delay gratification. This concept arises all the time in real life, and it’s worth pointing it out to your kids.

Quicken asked the adults in its survey what financial lessons they wish their parents had taught them. The most common answer was investing.

That seems like a pretty grown-up topic, but you can start laying the groundwork for it as soon as your son or daughter is old enough to have some money of his or her own:

• Encourage your kids to save by offering to match whatever they accumulate in a month (or for older kids, maybe in a school year) for some specific goal.
• This lets you point out how investing works: You commit your own money to something, and if all goes well, you wind up with more than just what you put in.

Here’s another easy way to start an ongoing conversation: Sometime over a family dinner when your kids are present ask your spouse or partner what they learned about money from their parents.

The discussion that follows can be just between the two of you, but I’m pretty sure your kids will pay attention. It’s a natural introduction to talking with your own kids

If you can, I suggest you look for ways to introduce topics such as the relationship between money and happiness, and perhaps your memories of the best and the “worst” money you ever spent (it happens to everyone in one form or another).

Talk about what it means to have financial freedom: lots of options instead of only a few, lack of worry when the bills arrive, the ability to make big and small choices.

Before your kids graduate from high school (or college if they are already there), give them a copy of a splendid little book by Jonathan Clements: How to Think About Money.

If your kids are lucky, they’ll also get some education about personal finances at school. There’s a growing movement afoot to include this topic in K-12 classrooms across the country.

A nonprofit organization in California, Next Gen Personal Finance, wants every high school in the United States to require a semester-long course in personal finance for graduation. This ambitious goal has a target of 2030.

The organization is putting its money where its mouth is, so to speak, offering grants of up to $30,000 grants to schools and districts  that make a commitment that all students receive a semester long personal finance course before they cross their high school graduation stage. Already, 35 teacher-advocates have made it happen in their school communities .

For parents who want to teach this on their own (and I hope that will include you), the NGPF web site includes all their materials, including some cool online games that make great teaching tools. All this material is available without cost – one heck of a deal, in my opinion.

For example, “Shady Sam” lets you play the part of a loan officer whose job is to squeeze as much money as possible from unsuspecting borrowers. It’s fun and enlightening.

Most states take a scattershot approach to teaching personal finance, but a handful now require such a course for high school graduation. Check your local school here – or your state here.

If you and your kids have 36 minutes, you can gather around your devices and watch a film called The Most Important Class You Never Had.

For high school or college-age young people, you can discuss one of the most popular articles I’ve written in years. It got lots of people’s attention. Maybe it will get your kids’ attention too.

However you do it, teaching your kids about money can be a good investment for you.

• You invest some of your time and show your willingness to engage with your kids.
• The payoff: As you and they grow older, they’ll be less likely to come to Mom or Dad for a financial bailout.

That seems to me like a win-win.

Richard Buck contributed to this article.