Teach Your Kids To Be Money Wise
We often wonder if we have taught our kids the skills and personal guidelines to be happy and fulfilled adults. How often do we spend time talking about and constructing our childrens’ financial wisdom? With debt and personal finance problems increasing, foreclosures and tighter wage realities mounting, we are neglecting this important life skill — or teaching it in the wrong way.
It can be hard to teach kids financial strategies, especially with many parents struggling with those skills, and reaping the side effects of this knowledge deficit themselves. Be open about where and how money is brought into the house and how it needs to be used. Many children do not understand the process of money “creation” and how wages are earned. For young children, these concepts can be too complex, but it is never too early to show children how to consider and value a limited resource. Remember, they already know how to protect, acquire and save their toys!
How Money Works?
Don’t treat finances like they arrive by a magic wand. Get the kids involved in simple banking projects. Open an account for the children to deposit their funds and gift money in. For younger children set up a home-based “bank” (like a piggy bank, but you can find these products in many child-friendly styles), for them to put their change in. Kids love the idea of saving, as it is a game. They become fascinated with how their money increases in their “bank”. Use this opportunity to teach patience, discipline and to instill the idea that saving for special things is fun. For older children have them become young entrepreneurs. Let them earn funds by doing projects around the house.
Economics for Kids
Allowances are no longer considered beneficial in instructing children about earning and saving money – the allowance “appears” out of nowhere. It also prevents the child from controlling how he or she works for money and implies that money is under the control of someone else who does it out with arbitrary will. Putting money in the control of the parents invites conflict. You can also inadvertently teach children to become blind reward seekers. These children can develop bad habits like frustration, indifference and impulse problems, as well as apathy and a sense of negativity that could transfer to school. They only see and approach effort with direct end-result (grades or money) thinking, leading to frustration issues when there is no reward or possibility of reward. Children can also become dependent on their parents for financial security if the allowance is handed over with no meaning behind it.
Volunteering and Understanding
Show, don’t tell, your kids that money is important but that it is not the only thing to focus on. A recent study from Poland, exposed by Charlie Wells of the Wall Street Journal, found that “children who don’t get straight answers tend to think about money in purely symbolic terms, giving it more emotional weight than it deserves…[the children] end up looking at the world through costs and benefits, rather than social rules of reciprocity. This can limit the ability to develop close relationships that would help people cope with problems in a way money cannot… if children continuously come to associate money with power…they might come to see it as a way to cope with fears, attract new friends or increase their well being.”
Have your children make a check for an animal shelter and then hand deliver the check to the shelter while committing to volunteer time there. Have the kids pick out food at a grocery store and then drive it to a food pantry. Spend family time doing things that do not involve money (hiking, bird-watching, gardening). Raising children to become resourceful and content adults never revolves around a single goal, but it grows from many “intelligences” and skills that come together to produce a whole person.
Resources Are Found In the Home
A recent Wall Street Journal article discussed a research project involving financial education courses geared to children. These finance courses were ineffective. The article concluded that children learn finances through understanding math, but most significantly – financial skills need to be discussed in the home. Finances have to be inserted into the real world through family lessons. Don’t hide or lie about money to your children. Spend time discussing the role and value of money. Teach your children that happiness, contentment and value do not revolve around how much money you have, want to have or spend. That, while planning for the future and accruing savings is very important, it must be supported by “higher” life skills such as empathy, caring and self-respect. Money has no association with self-worth, talent or emotional health.