It’s important to instill financial responsibility in your children at a young age — but that’s easier said than done.
Different family situations make teaching your kids about money challenging for very different reasons.
Children who are brought up wealthy, for example, often have: They may not appropriately respect its value because it was always plentiful. They might not know how to budget properly when the need arises, and they’re at risk of lacking empathy toward non-wealthy peers.
Of course, children of less affluent upbringings will deal with their own money misconceptions.
So the question is: what’s the right way to teach your kids about finances?
Many parents try to teach children about money by making meaningless, often cliche statements.
“Save your money. Don’t blow it all.”
“Money has to be earned — it doesn’t just grow on trees.”
“A penny saved is a penny earned.”
These “words of wisdom” will usually just result in eye rolls — not wise financial decisions in coming years.
Because money is, after all, something of a social construct. Different people feel very differently about the role of money in their lives. Some live to make it, while others just want to make enough to live.
So in order for these statements to mean anything, you’ll first need to define the true value of money.
You can make as many rules as you’d like, and you can tirelessly work to turn those rules into laws in the minds of your children. But if you want your children to have a healthy relationship with and understanding of money, you can’t simply make rules.
Rules are, after all, meant to be broken.
If you really want your rules to mean something and to be obeyed, you need a strong foundation for them — some principle or reason as to why exactly those rules need to be followed.
Money is, at the end of the day, superficial. So how we feel about and act toward money must be rooted in something deeper: a value system.
Because values are not superficial — they’re incredibly important and meaningful. And once adopted, values are your own rather than an outside imposition. So don’t make rules — make time to discuss values with your children.
Most Sundays, for example, I have a family meeting with my two kids — my 10-year-old son and 12-year-old daughter — during which we discuss certain topics like values and how they serve as a sort of “glue” in our lives. Without them, we say, we can easily be pulled any which way.
I think these Sunday family meetings could be beneficial for every parent to do, while making sure to touch on the value of money in life.
But sometimes, children need to see the value for themselves.
After all, seeing is believing, so it may require some self-realization for your kids to come to any conclusions about how to best handle and value money. But there arecertainly ways to guide them to that self-realization.
For example, my kids each get $10 allowance per week for doing their chores. Part of the deal, though, is that 20% must be saved and 10% has to be used to help others. The other 70% is “fun money.” My daughter typically chooses to save more than the required 20% while my son tends to blow every dime of his.
For her, saving began as a rule — but now it’s a value.
As she watched her money stack up, increasing by $2 week after week in the tupperware container in our cupboard, she began to realize it’s much smarter to save than spend right away. Because while her purchasing options were limited to snacks before, she’s now saved up enough for something much more valuable: softball pitching lessons.
Ultimately, my strategy paid off. I encourage every parent to take a similar approach to teaching your children the value of saving money. Because you can’t just tell them — you have to show them.
Children need to understand that money is vital — yet never promised.
Money is something we have to earn.
And when we don’t, there are consequences.
To teach my children this, I’ve explained that if I don’t work hard and earn money to pay the mortgage bill, the bank could repossess the house. I’ve literally pulled out the electric bill, put it on the table, and said that if I were unable to pay it, the lights would go out. I don’t do these things to assert power — I do them to teach my children what it takes to live comfortably and happily.
I also do it to warn them that if you don’t appropriately value money — and respect the hard work it takes to earn it — struggle follows.
I feel like my kids are old enough to begin to face these harsh realities. Whenever you as a parent feel your children are ready for this same type of realization, I encourage you to do the same.
It’s all about teaching children in ways that will stick. Saying and doing things that will resonate later in their lives. And I strongly believe the best place to start is by creating the right value system — then stepping back and allowing your children’s own experiences to reinforce them.