We sat down with Adam Carroll, Professional Speaker, Author, Documentary Film Maker, and Podcast Host, to talk about tactics for teaching kids financial literacy from an early age. Below are his top tips for raising kids who thrive with money.

What are some misconceptions that kids and parents have about financial literacy for their kids, for their future?

Well, I think as it relates to college, there is this idea that:

• You have to have a college degree to be successful, which I am a pro-college person but I am also an anti-debt person. Today, more than any other time in history, it is entirely possible for a young person to go get a two year degree and come out making as much or more as someone with a four year degree so that is the first patently false assumption that most parents make.
• There is an idea that it is your responsibility to make sure that your child can go to college and not just any college but the college that hey want to go to. I believe that some students have a dream university that can become their nightmare university when they start getting the student loan bills four years later. We have to educate people not just about the choices that they are about to make with school but the cost associated with those choices and the consequences of borrowing money for four years that could take you twenty to twenty-five years to pay back.

–Adam Carroll

You say, "Kids are not on the financial plan forever," and you want to encourage them to understand that. What do you mean?

Well, I believe that in today's day and age kids are growing up in a financially abstract world meaning they do not have their hands on money on a regular basis. It's not tangible. They see their parents swipe a credit card or use Apple Pay. We are paying our bills online so they don't even see parents sit down to write checks anymore. There is this abstract issue around money where they don't have a firm grasp on the value of what things cost. The challenge there as well is that when a kid is spending their parent's money, it feels endless. There is no limit to how much is spent, but when a kid is spending their own money then they are much more tight with it. I believe that parents need to tell their kids that they will be off the payroll and it's someday soon, here's the date. Next, I believe that young people need to spend their own money and not their parent's money. One story that is in my book, "The Money Savvy Student" is about a young man named Carlos whose parents gave him $50 a month, food, and shelter. It was at the age of 15 that they said anything you want above those two things, you are on your own. So he paid for his own school clothes, his own school supplies, his toiletries, his cell phone, gas. I asked him what that was like and he said, "I had to learn how to manage my money really well. While I saw all my friends breaking their cell phones and getting them replaced or wearing $70 jeans while I bought things at the second hand store, I was much more intelligent with my money." –Adam Carroll

I love that. It's good to be tough early when you can still be around to catch them and help mentor them as they learn. Are there any jobs or tips that you can suggest to people early on that they can do and learn while they are still in high school?

My kids get an allowance and part of that idea was that they are going to do work around the house, get a set amount of money, and make decisions on their own when it comes to money. If they want more, we have things set up such as if you want to earn $5, then research a scholarship application and fill it out. As soon as you show me a completed application, the $5 is yours. For many students today, that is uncomfortable yet the better they get at that, the more likely it is that they will borrow less when it comes to their college experience. Make your kids uncomfortable. Have them do work. I'm not above paying my kids $10 per hour to get on CodeAcademy or Code.org and learn how to code for 10 hours a week during the summer. I would be all over them doing that. –Adam Carroll

What is another tip from your book on getting your kids financially savvy?

One of the things that I do with them that most parents do not necessarily think about doing until later in life is that they have two accounts: 1) checking account and 2) savings account. These accounts come with requirements from us. By the time they are five, they have to have $300 in their emergency account. By the time they are seven, they have to have $400. By the time they are nine, they have to have $500 in that fund. People ask me, "What kind of emergency would a nine-year-old have that would cost $500?" My point is that they are not going to have a $500 emergency, but they will always have $500 in emergency cash and if they have it at nine then they will have it at nineteen and twenty-nine, thirty-nine, forty-nine, etc. We are setting the right habit for that emergency fund. Second, they have an investment account and the investment account is set up so that the kids can put money into their "invest jar" every single month and I match that jar up to $25 at the end of every month. We call it the family 401(k) plan. The kids put in money in the glass jar and at the end of the month I have them bring their jar down and whether they have 15, 20, or 25, I double it. Then we invest that in a custodial account through E-Trade and that usually goes to buy a SMP500 index fund or maybe a stock that my kids want to buy that is capital efficient and pays good dividends. They watch it every month. My goal for my kids is for them to have an MBA before they go to college by understanding these things. –Adam Carroll