Expert Interview with Elisabeth Donati on Giving Kids a Financial Education

elisabeth_donati_photo_pool.jpgMore and more parents and educators are recognizing the value of educating children about money from a young age, but many don't know where to start in the process.

Elisabeth Donati, owner of Creative Wealth Intl. LLC, has sought to remedy this issue by building her own program called Camp Millionaire.

In her experience, she says parents make two major mistakes when discussing finances with kids. The first is, they don't understand the power of setting the right example.

"Too often kids hear their parents say one thing about money but watch them do something completely different with it," she says.

Secondly, parents often provide information in lecture form when the child is not receptive (when's the last time you listened to someone lecturing you?).

Here, Elisabeth talks about why it's important to get kids excited about their financial education and how to do it. Read on:

 

What's your personal finance background? Why are you interested in it?

I delved into money and investing when I was in my early 40s ... right after I realized that while I grew up on a farm and learned how to do almost everything from gardening to raising chickens to canning food and fixing tractors, I learned and knew practically nothing about money.

About that time a good friend handed me Robert Kiyosaki's book, Rich Dad Poor Dad. I read that book in two days, realized what I had missed when I was younger and was off and running. I also realized that if anyone was going to save and invest money for when I got older, it was going to be ME!

I started reading everything I could about money, took a personal investing class from the local college and slowly started to use this exciting new knowledge for my own benefit. For the first time in my life, I was starting to have a handle on the money that flowed through my hands.

Many people ask me if I have a degree in personal finance or if I'm a financial planner. The truth is, my programs encompass so much more in terms of money and being responsible with it while becoming responsible in all areas of life because I don't have to pass anything by compliance boards and I don't believe that the only way to invest is to put your money in the stock market in some way ... I simply teach everything that I wish I had learned as a kid in order to be financially successful.

The fact that I am a serial entrepreneur is also great because my students learn that going to college and getting a job is just "a" way to bring money into their lives ... I show them that starting their own businesses is another great way and a large percentage of them love learning that this is an option.

More than anything in the world, though, I love teaching kids of all ages the difference between earning money and making money. And because I'm not your typical financial education instructor and Camp Millionaire and The Money Game are not your typical financial education programs, the participants in my programs learn about financial belief systems early on so they don't have to be trapped in one that doesn't support them later on.

 

Tell us about Camp Millionaire ... what is it?

Before I tell you about Camp Millionaire, I'd like to point out the distinction between two phrases that are not interchangeable and often used incorrectly. Those two phrases are financial literacy and financial education.

Financial literacy is having knowledge in the field of money and being able to understand financial terms, principles, and theories. It's a state of being in that one is literate in the area of money.

Financial education, however, involves teaching others about money and investing.

I am in the financial education industry, and my goal is to improve the financial literacy situation in the world.

Now, about the camp ...

At about the same time that I was busy teaching myself about money and investing in every way imaginable, I began to notice that everywhere I turned, people were talking about money in one way or another: how they felt about it, what things cost, how much they'd spent on this or that, what their kids were doing with their money, etc.

The conversation and topic around money was ubiquitous. I couldn't get away from it. I heard college students talking about their credit card debt on the streets walking around town, I heard a grandmother talking to someone about the cost of gas in a bathroom stall, I heard an adult woman tell her girlfriend in a store that her husband was going to be so angry when he found out what she'd spent on a dress she'd just purchased.

About this time I read the infamous "letter to the editor" that became the catalyst for my future. It was written by a retired business attorney who asked a simple question at the end of his editorial piece. He asked:

"When, as a nation, are we going to start teaching our children about money?"

I really understood what he was asking because by then I was so acutely aware of the lack of financial intelligence in the world and the lack of financial education in my own life.

I stood up and said to the Universe, "If we're not going to learn about money in schools, why doesn't someone start a money camp for kids so they can learn about money in a camp in the summer?"

That someone turned out to be me, and Money Camp for Kids was born in August of 2002. We changed the name a couple of years later to Camp Millionaire® because it was more appealing to the kids and because it's a fact that the next generations of adults are going to have to be millionaires if they intend on being able to live the way they want to when they get older.

Over the years, the program developed into a intensely fun, fully experiential, activity-based financial education program that features our propriety game, The Money Game®. The program is highly effective* because our participants (ages 10 and up ... including adults) learn about money and investing by DOING money and investing in the programs. They learn quickly and easily because playing, laughing and having fun generally cause people of all ages to let down their guard and simply learn.

Camp Millionaire and The Money Game can be used as the basis of a summer camp, weekend program or semester-long financial education curriculum in any type of school. We've sold and licensed both programs all over the world, and kids and teens (and adults) are finally learning about money and investing in a way that really works!

*By effective I mean that participants retain the information they learn so they can put it to use when they need it.

 

Why are you so passionate about teaching financial literacy to kids? Why do you think it's important?

I'm passionate about financial literacy because no one taught ME about money when I was young. The majority of our nation's children grow into financially ignorant adults who are stressed because they don't know what to do with their money, too often dependent on a government system that could easily have prepared them to live responsibly with money, and have been conditioned from a young age that using other people's money is OK.

They often have no idea how to get themselves out of the financial mess they got themselves into because they lack good financial habits, the knowledge of proper use of debt and are simply ignorant when it comes to investing in the assets that help us all become financially free in life.

It is my personal opinion that financial education should be the context through which most every other topic in school is taught. Why not teach math by having kids calculate the return on different types of investments, real estate cap rates, interest rates and learn stock strategies; teach reading by having kids research ideas, read financial and business plans, and read books on investing and business; and teach writing by having kids write business plans, marketing plans and copy for advertising.

We all agree that our children are not being prepared to live responsibly as adults and I, for one, do something about this in a big way in my camp.

 

How can parents and educators get kids excited about personal finance?

Simple ... make financial education fun and relevant.

How often, as an adult, have you sat through a boring PowerPoint presentation where the information being presented was so dry, so not relevant to your life that you could barely keep your eyes open? Add to that the addictive nature of Facebook and you've lost your audience into the abyss of the Etherverse.

The majority of financial education programs on the market are boring and have been created by financial institutions of one type or another or miscellaneous nonprofits wanting to teach kids about money. While there is nothing inherently wrong with these programs, most of them are simply not effective at increasing a student's level of financial literacy. So much so that there have been several articles written over the years about how financial education does not work. MY program DO work.

The other aspect of most other programs is the glaring lack of focus on the investing information, habits and skills. There is an emphasis on "saving," but saving without investing generally won't create financial freedom for most people as they get older.

In order to excite kids about personal finance, you have to make it fun ... teach financial concepts, principles and habits using games, contests and interactive activities that help students remember principles like "Pay yourself first" and "Only borrow money when it makes you money."

In terms of making it relevant, you have to remember that human beings learn is three basic ways: by what we see, by what we hear and by what we experience. You find out how money is relevant to your child by asking them questions, not by simply giving them information when you think you should give it to them.

The best way to introduce and teach kids about money is for them to see, hear and experience their parents being excited about money and investing.

When a family learns about money and investing together and you make the child part of the family conversation, great things happen!

 

What seems to be the most common frustrations/concerns/questions parents or educators come to you with in regards to talking to kids about money?

The first frustration I hear from educators is that there is a lack of time to teach financial education, lack of money to purchase highly effective financial literacy education materials and a huge lack of emphasis placed on the need to teach real-world skills to our youth.

Generally speaking, a teacher will either opt to teach a financial program to their students and purchase the materials themselves, with or without the ability to be reimbursed by their school, or the local administration will decide that financial education needs to be taught in their schools.

Once this is decided, the teacher or administrator goes in search of a program, and this is where it can generate varying levels of frustration, depending on how much money the teacher or administrator has to work with.

The saying, "You get what you pay for," is quite true when it comes to financial education curricula. If you opt for free, you're going to get boring and not effective. If you opt to pay for the best, you're going to get fun, relevant and effective. And not having funding doesn't mean you can't get the best programs. I have many teachers purchase our programs with grant money, and we also have our own Get One, Give One Grant program where we donate The Money Game to anyone who applies.

By far the most common comment I get from parents is, "I sure wish I had gone to your program when I was a kid!"

The biggest frustration from parents comes in the question I get all of the time, "Why on earth don't schools teach kids about money and investing?" There are so many "possible" answers to this question that it would take a book to answer them all.

The short answer is that our school system is messed up from the top down. Our priorities are wrong in terms of what we teach and what we're actually preparing our youth for as adults. Again, this is a huge conversation that deserves its own interview!

The long answer involves looking at the motivations that have led school bureaucrats to decide that a "liberal education" should be taught at the expense of life-skills education instead of blending the two in order to create a well-prepared, well-educated adult who can think AND take care of himself. For some reason, there is a huge disconnect between who makes the decision about our schools and who is actually teaching and learning in them.

 

When should parents start having personal finance conversations with their kids? What should those early conversations or lessons look like?

Once parents realize that their children are learning about money from them every single day by watching, listening and simply being around when their parents are doing anything financial, they can become more aware of how to use these financial situations to instill the right habits, beliefs and information in their children without saying much at all.

I wrote an entire book on how to teach children about money. It's called The Ultimate Allowance, and it shows parents how, starting around the age of 5, to begin giving their children the opportunity to practice with money so that by the time they leave home, they are responsible money managers.

The concepts in the book involve running the money that it requires to raise the children THROUGH the children rather than simply buying everything FOR them ... and you do this starting with small amounts and small purchases when they are young and ending up with large amounts and larger purchases as they get older and, hopefully, wiser and more responsible with the money.

 

How should personal finance conversations evolve as your kids get older?

As children get older, their interests in money change. At first, and for most of their young lives, money is simply a means to get things they want.

Also as they mature, children begin developing what will become their primary "money personality," and it will show itself in more detail as the child becomes a young adult.

For example, a saver will save more; a spender will continue spending his money, regardless of how much he makes; an avoider will become more averse to taking a look at his financial situation.

(For more information on money personalities ... and we all have them ... check out Olivia Mellan's books on the subject).

Obviously, as children grow into young adults and start getting ready to leave home, go to college and start working to take care of themselves, all aspects of making and managing money become increasingly more relevant and, hence, more interesting.

My suggestion is to find out what is currently relevant to your children and make those areas of interest the ones you explore with them, regardless of age.

And finally, recognize that your children are probably not going to get a decent financial education in school, so either send them to a money camp for kids or teens or supply a program like The Money Game to their schools and/or teachers so they can prepare your children for success around money in life.

 

What's the most surprising thing you've learned over the years about kids and money?

This is an easy question. When my son was younger, he had no interest in stuff but he loved nice clothes. Because he didn't always live with me, at Christmas I would take him shopping and tell him he had $100 to spend.

One Christmas when he was about 14, we started out on this annual trek in and out of stores here in Santa Barbara. After about two hours, I was exhausted; he just couldn't make up his mind about what he wanted. This is when the a-ha happened.

I took out a fresh $100 bill and handed it to him, saying, "Here, go buy what you want. I'm going to sit here and rest for a bit."

He looked at me, looked at the money, put the $100 in his pocket and said, "We can just go home. There's really nothing I want right now."

I stood there with my mouth aghast and realized what I had just learned, which was ... children happily spend their parents' and other people's money (sounds like training for getting into debt later) but hesitate and think twice before spending their own!

 

What are some of your favorite tools, resources, books, etc., for talking to kids about money?

My favorite financial education tools are anything interactive and playful. Robert Kiyosaki's Cash Flow for Kids game is great for small groups and his Cash Flow game for adults is great for ages 14 and up.

Monopoly is always a great choice, as is any other game involving money.

Sending your kid to a financial camp (or four of them from ages 10 and up) can help lay a great financial foundation for their adult life with money as well.

And of course, I always suggest my Ultimate Allowance book for parents, as it isn't just an allowance method that works better than anything else, it's like Camp Millionaire in a book with plenty of questions to ask kids, ideas and topics you might not otherwise think to talk about with your kids.

One of my favorite suggestions is simply to involve your children in the family's financial tasks. Let them help you develop budgets, let them in on how to save for the next vacation, show them how to pay bills online and by all means, teach them how to read every kind of statement and bill you get. There is no better financial education teacher than real-life experiences with money!

Lastly, I would like to simply remind all parents, guardians and teachers to remember that introducing and teaching money to any age human being works best if it's approached as a conversation and not a lecture. People of all ages love to talk about things but dislike being told what to do.

Once you bring up the conversation, you might just be surprised at how open your kids and students are to learning about everything that has to do with money!

Connect with Elisabeth on Facebook, YouTube and LinkedIn.