Teaching Your Kids About Money
Becoming a parent means you have to have ‘the talk’ with your kids. And the money talk is just as important as the other big talk.
Sadly, many parents feel intimidated about this conversation since they feel bad about some of the money choices they made. The good news is that your regrets can make for the BEST jumping-off points when talking to your kids.
Today, we will go over what some experts feel are the most critical elements in teaching your kids about money. Later in the month, I will give some guideposts on what you should teach your kids at various stages of life.
First of all, you need to discern what you feel about money. Before you can teach anything, you need to have a base from which to start. Be forewarned, almost no couples feel the same about finances. Usually, ‘savers’ marry ‘spenders,’ ‘vacation-takers’ marry ‘retirement-savers,’ and ‘big-party’ people marry ‘support-charity’ people.
And that’s ok. Why? Because if you both had the same money values, you would both have the same blind spots. Financial health starts with both of you seeing the other person’s values and fears. Now, on to teaching your kids.
4 Things They Should Know
The President’s Advisory Council teaches that by age 5, children should start to know:
1. You need money to buy things.
2. You get money by working.
3. You may need to wait to buy something.
4. There is a difference between what you want and need.
I think this is a great starting point. Frankly, if most adults learned this, I’d be out of a job. But you see in this shortlist some key points.
Money is limitless. Your priorities in life can be funded by money, which points to your work ethic. The sooner kids learn this correlation, the sooner they become productive, independent people. If your kids love animals, they will learn a great lesson mowing lawns to donate to the Humane Society.
You control money, or it will control you. Emotions are a great servant but a horrible master. The last two points will help your kids learn that their future is in the hands of their ability to delay gratification.
All four of these principles will give you an excellent opportunity to share good and not-so-good choices you’ve made. The hope here is that kids will simultaneously become fascinated at the potential of money while not becoming obsessed with glamor. Hollywood will show them the glitz of money. The hope is parents can show them the power of money through investing in their future or improving the lives of the less fortunate.
And those lessons are the ones parents can teach to ensure a better future for our kids, grandkids, and world.
Next time, I will give some age-related timelines for teaching your kids about money.
Feel free to contact me with questions about this subject and any others!