Everything is Awesome! 5 Important Personal Finance Lessons I Teach My Kids Based on LEGO

Did you know that the plural of LEGO is LEGO, not LEGOS?  It’s like “deer” or “moose,” where the singular and plural are the same.  I only know that because I’ve been a LEGO fanatic since I was a kid!  I love building the intricate sets and watching the scene come to life.  But, I’ve also been a personal finance enthusiast since I was a kid.  Recently, I started realizing that there are a lot of personal finance lessons you can teach your own kids based on playing with LEGO.

1. If you want to build it right, follow the instructions.

Have you ever dropped a LEGO piece and then tried to put it back together by “eyeballing it”?  It often doesn’t work.  I dropped a LEGO Valentine’s Bear once, and it broke.  I tried to reassemble it from memory and it wound up looking like something from the mind of Pablo Picasso.

So, what are the instructions for personal finances?

It’s two things: a budget (or spending plan) and a long-term savings plan.

If you don’t have a set of instructions to guide you, you’ll have a lot of trouble building something that looks like what you wanted to build.

Budget (or spending plan)

Many people hate or fear the “B word,” but I still think it’s important for most people to use a budget, especially when they’re first starting out.  I learned how to budget when I was in middle school, and it really kept me from overspending when I was tempted to buy something I shouldn’t.

A budget doesn’t have to be a big deal to write.  I wrote a 3 part series on budgeting that starts here: Budgeting Part 1.  Check that out for more details on why a budget is so critical and how to set one up.  Feel free to download my free template for building your easy budget that works.

Long-term financial goals

• What do you want your retirement years to look like?
• When do you plan to start retirement?
• How long until you need to have money saved up for kids’ college?

These questions are critical ones to ask yourself and your spouse so you can start saving NOW to have the life you deserve in the future.  Your kids need a reason to not spend every dime they get on knick-knacks and nonsense.  Without a clearly defined vision for their financial future, they’ll chase every “dream of the moment.”

Teach them to be intentional!  Help them come up with long-term financial goals like saving up for a car, saving for college, saving for a wedding.  And, yes, help them start saving for retirement when they’re young.  The sooner they start building those “savings muscles,” the better.

2. It’s a lot of work during the “construction phase.”

If you’ve ever built a LEGO set, you know it’s a lot of fun to construct, but it’s a lot of work in the building process.  Have you seen the giant architecture pieces like the Taj Mahal or the big Star Wars pieces like the Millennium Falcon?  Some of those bigger projects are 15-20 hour builds!

Personal finances are much the same way.  When you’re first getting started, it’s a lot of work.  You’ve got to create the accounts, pick the investments, set up your investing strategies, learn the process etc.  Still, I think it’s a lot of fun, both in LEGO and in personal finance!  I think that’s partially because of the sense of accomplishment we get when we’re done “building.”

Learning the mechanisms, behaviors, and investing philosophies that you need to know to succeed is indeed work.  However, it’s important to teach these personal finance lessons early so that they’ll be on more solid financial ground when they get older.

3. If you’re missing one piece, it can make the entire thing fail.

I’ve definitely had times when I was building a several thousand piece LEGO set and realized at one point that I had missed a single piece.  I’ve also had times when I misplaced a piece by just a couple of pegs, and that created a big problem later on.

It’s the same with your personal finances.  If you’re solid on picking mutal funds but you don’t get disability insurance, you could experience a financial catastrophe.  If you’re maximizing your tax-advantaged investing but you aren’t paying attention to your spending habits, you’re plan will fall apart.  Your financial plan needs to be complete and comprehensive.

4. The knock-off versions are not as good as the real thing

I’ve tried some LEGO-like toys, and they’re just not as good.  The pegs don’t fit securely, the instructions aren’t clear, and the final product isn’t as steady.

As you’re teaching these personal finance lessons to your kids or your students, teach them sound financial principles.  Beware of “knock-off” investing schemes, get-rich-quick ideas, and shortcuts.  There are NO shortcuts to a secure financial foundation.  That’s probably one of the most important personal finance lessons you can teach.  If people want to build wealth, they need to do it slowly and with a clear vision.

Take a look at the “Further Reading” section at the end for some additional articles to help you coach your kids and students to achieve financial success.

5. Duplos are good for beginners, but you should increase in difficulty by age group until you’re at expert level

I really enjoy the complex architecture sets that are rated for ages 16+.  When I was a kid, I was much more into Duplos and the simpler LEGO sets.  You have to start with simpler ideas and then work your way up as you gain dexterity and comprehension.

As you’re teaching personal finance lessons, you won’t start with the backdoor Roth IRA or real estate investing.  You’ll want to start simple, with topics like creating a basic budget, learning wise spending habits, and setting long-term financial goals.

As your kids or students prove competence with these simpler topics, you can expand to additional topics of increasing complexity.  Start at a novice level, but don’t stay there!!

Final Thoughts

Whether you’re building a financial strategy or the LEGO Death Star, you’ve got to follow these basic precepts.  Your kids and students will imbibe these personal finance lessons if you teach them the sound financial principles early.  The more you demonstrate good financial principles to them, the more they’ll learn.

More is caught than taught.  They’ll observe you and they’ll learn based on your own behaviors.  Follow these concepts and help them build a masterpiece!

Further Reading

• Listen to the companion podcast episode with Dr. Jason Mizell
• 9 Easy Steps to Building a Great Investing Strategy Using the Tax-Efficient Waterfall
• You can be a millionaire, and you should!
• The beginner’s guide to student loan management.
• Financial goals: begin with the end in mind.

Please leave a comment below!  What financial concepts are important to you as you teach your children and/or students?

 

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