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We all learned about money from our parents, and our children will learn all about money from us.
It can be a vicious, self-defeating experience when we look back and see how our grown children use money, especially if we didn’t get it right. We literally can keep passing down bad money habits, ideas and mindsets from generation to generation if we don’t do something to stop the cycle.
To help you teach your kids about money in a healthy way, you first need to understand where your money story came from.
Here’re some questions to get you thinking:
1. What stories did your family tell you about money? Was there a story that was repeated over and over again in your family? Were these stories positive or negative?
2. How did your mother portray her attitude about money? What messages did she send about money?
3. How did your father portray his attitude about money? What messages did he send about money?
4. Did you worry about money as a child? What stories or words would you use to describe your worry about money?
5. What did you learn about money as a child? How did these lessons make you feel about money?
6. When given the opportunity to learn about money do you resist learning this information?
7. Does money flow in and out of your life smoothly or do you have difficulty getting and giving money?
8. Do you feel in control or out of control concerning your financial situation?
9. Do you know what your financial goals are? Do you have a plan to get there or are you using the hope and pray method?
10. When you think about money, do you feel dread or excitement? Why?
As you ponder the answers to these questions, you’ll more than likely begin to see where you got your beliefs, mindsets, and spending habits from. Because you’re on the journey to fixing your money problems, you’ll want to consider all the ways in which you’ve influenced your kids up to now.
It’s not too late though to course correct any bad habits you’ve instilled in your kids.
Valuable Lessons To Teach Your Kids About Money
1. Children Should Earn Their Money
When I think back and how terrible I did in this particular area, it makes me shudder. I gave my daughter money all the time when she was growing up, and she never had to earn it. It was a bad move on my part, one I regret immensely.
Children should earn money through chores, but the chores shouldn’t be regular housekeeping chores like taking out the trash or emptying the dishwasher. These things need to be done to upkeep your home, and your kids should not receive compensation for them.
Instead, they should receive money for chores that are outside the regular housekeeping routine, like cleaning the basement or mowing the lawn. This will help them to learn respect for both the work itself and the money they earn from it.
2. Don’t Go Overboard
Giving your children everything they ask for is a recipe for disaster, particularly if the money you spend is robbing them of their future.
Toys, clothes, and games in excess is a ridiculous waste of money. If you want your children to understand about money, they need to learn how to control their wants and desires. They need to learn the big picture – how saving for the future is more important to their overall security than the latest game.
If you spend hundreds of thousands of dollars now and 18 years from now you have nothing set aside for your child’s college education, you’ve taught your child nothing about future value and everything about wastefulness.
3. Teach Your Kids About The Dangers of Credit
Sit down with a credit card statement and show your child what happens when they buy something with a credit card and fail to pay the balance in full when due. Show them how that $20 item ends up costing way more than $20.
Explain how they will be bombarded with credit card offers when they turn 18 and why they should avoid them at all costs.
Again, teach them about the big picture and what the future will look like for them with and without credit card debt.
4. Don’t Be Quick To Help Your Kid Out of Financial Trouble
I’m not saying you shouldn’t help your child. What I am saying is you should first counsel them to see if how they can help themselves first. Walk through all the scenarios with them.
If you do help them out, talk up front about whether the money is a gift or a loan. Of course, a gift will be easier for them, but a loan may be more educational. If you do end up lending them money, realize you may never get that money back.
5. It’s Your Money – Spend All of It, If You Want Too
No rule says when you die you have to leave your children money. My parents didn’t leave me any money, in fact, I got saddled with paying for my father’s funeral expenses because he didn’t have the money to cover it.
It’s a nice idea to be able to leave your kids an inheritance, but it’s more important to leave them a healthy money legacy which includes the confidence to earn their way.
What you want to leave them with is the knowledge on how to earn money, spend money wisely, save smartly, invest for the future and enjoy their life debt free.