Required Reading for Kids and Teens at Catch a Gideon

January 25th, 2007 by digerati

Here are some good books for kids to read to learn about personal finance basics.

It is important to learn personal finance skills at a younger age. It helps create the habits necessary for competent financial management in the future. As many PF bloggers agree, habits are important to set before you manage a lot of money so that you aren’t suddenly trying to change your attitudes and lifestyle once you have some money to spend and invest.

Don Silver’s High School Money Book. He focuses on kids (teens) opening bank accounts, getting a job to learn money management skills, and learning to make good buying decisions as they enter college.
The Ultimate Parenting Map to Money Smart Kids by Linda Leitz. Linda wants to teach people to avoid debt, save 10% of their incomes, and build emergency funds in case of unexpected expenses.
Getting Started: The Financial Guide for a Younger Generation by Brian Jones. Brian felt that many of the financial books aimed at 20 to 30 year olds were dated.

While many will disagree with me, I also think all teenagers should read Robert Kiyosaki’s books Rich Dad Poor Dad and Cash Flow Quadrant.

Rich Dad Poor Dad gives a great overview of the two generalized ways people think about money. The first is the vast majority of people, who often live pay check to pay check. And the second is those who think about maximizing their money to do more for them. Without too much detail on the book, it is important for teens to realized how they think about money, and to learn better ways to think about it. While Rich Dad Poor Dad won’t give you much in the way of specific things to do to think differently about money, it gives you a good perspective on other views out there and can excite you about thinking about your money and future.

Cash Flow Quadrant provides an overview to how money can be used. There are 4 (surprise!) ways you can make money. The first is to be an employee. This is how almost everyone makes their money: they work for someone else, trading time for money, limiting your income based on how much you make per hour, and how many hours you can work. Another is to be self employed. You don’t work for someone else, but you still trade time for money, and your income is limited by how much time you can put into something (and how much you can charge per time unit). A third is to be a business owner. Here you can make money based on how many hours your employees work, but the income is often highly based on how much time you spend managing the business. The fourth (and best) quadrant involves residual income; he calls this “external” income. This is the best because you earn income regardless of if you are working. This includes owning real estate (you get rental payments), writing books (you get money for each sale even though you are no longer working).

These two books are important because they provide a basis of how teens should start thinking about money. It also allows them to dream about getting out of being an employee forever.

Do you have suggestions for other books aimed at kids, teens, or college students? Leave a comment.