Looking in from the outside, I always assumed that being a parent was a rewarding job but also hard work. I learned how true that was when I became a parent. I am a Mom, first and foremost, and it’s a title and job that I love. It also takes great effort, endless patience and much love to do it well. As a parent, you hold such tremendous power in your hands as you shape and guide your kids, and not everyone recognizes the power they wield or their responsibility to their kids.
Last Monday, I shared 3 important life skills every child must learn, which is just a small sampling of all the life skills kids need to succeed in this world. We sometimes overlook these important life skills because we assume that kids naturally observe and learn these skills without us needing to emphasize them. In many cases, they do, but too often I find they don’t learn them as well as parents hoped they would without additional guidance from us, especially when it comes to money.
We are the culmination of our daily decisions and many of those decisions revolve around money in some capacity. We often think it is the big decisions, such as choosing a profession, whom we marry or buying a home, that have the biggest impact. And they certainly do play a big role in shaping our lives, but we also tend to think through those decisions. We generally don’t wake-up one morning and impulsively buy a home.
But in our lifetime, we will spend thousands of dollars mindlessly on little things, without even realizing it, from buying our daily cup of joe to drinks after work to a pack of gum or upgrading our smartphone. And none of those decisions are bad or wrong — provided you are in the driver’s seat and thoughtfully making value-based decisions. Too often people don’t make deliberate decisions with their money or think of the consequences until it’s too late. This is why having money life skills matter, and kids who know how to make good decisions with their money are more likely to create the life they want for themselves.
Again, this is not an exhaustive list of the life skills related to money that I am teaching the girls. But these five help form the foundation and are essential skills that every child needs to be taught.
I hear many Moms talking (and sometimes commiserating) on the playground. One hot topic is always around giving kids money. Some parents think it is cute that kids think of them as an ATM machine, willing and able to hand out $20 bills on demand. Others, like me, think that is a dangerous precedent to establish. My girls know that money is earned and not given on demand, in most circumstances. Yes, there are instances where they may ask for something and we make the deliberate choice to fulfill their wish and grant them an impromptu gift. This is part of the pleasure of being parents. The girls also know that is a rarity, not the norm, so they treasure those moments versus expect them. They know they cannot walk into a store and I will buy them everything they want. Or expect to be given money upon request without earning it.
One of the lessons my father taught me was that money was earned, but you should also treat it as a gift. A gift you can use to create joy for yourself and others when you use it alignment with your values and goals. Many people do not respect their money and spend it carelessly. Or they fear losing it or not having enough. We want the girls to be able to make confident decisions with their money versus second-guessing themselves or spending mindlessly. This is why we taught them to set save, spend and share goals. They treat their money with respect and use it on what matters most.
We are emotional beings, which is not a bad thing at all. It does mean, however, that we need to be aware of how our emotions can affect us. Many of us lack emotional competence when it comes to money, because we were never taught it. Our mood dictates whether we buy something or not, which often leads to overspending, because buying something gives most people a temporary high. It diminishes the emotions that caused pain, so we turn to it again and again.
Teaching my girls to be aware of their emotions and their spending triggers has always been one of my biggest areas of focus. I want them to recognize the signs, see the patterns and most importantly — to know that buying something is a short-term fix and to have better, more constructive, methods to handle emotions that cause them to spend.
Money has great power, but we tend to be rather careless with how we use it. Many people buy things to “keep up” or follow the herd. This always makes me sad when I see it. Even beyond any potential debt issues, it troubles me when people let others dictate how they should use their money because they don’t want to be judged negatively.
I’m raising Lauren and Taylor to be independent thinkers who know what they value and use those values, along with their goals, to guide their decisions. Nothing makes me prouder than watching Lauren calmly articulate why we spend money on certain things that others may deem as frivolous when people take jabs at our spending. She gets it. We make deliberate choices on how to use the family money on what brings us the greatest happiness versus spending on our money on what society deems as appropriate. Too many spend to make others happy, which leaves them feeling empty inside and causes them to spend even more. This is not the life I want for my girls.
Kids learn from their observations, which don’t necessarily tell the whole story. I’ve talked to many parents who did all the right things money-wise, but their children weren’t aware of their good money habits. Kids only heard “no” and saw them pinching pennies, not realizing there was purpose being the “no” and they were being intentional with their money, not being cheap. It is important that we talk openly to our kids about money and demonstrate good financial behavior, but we must also give them the opportunity to flex their own money-decision muscles. Observing only teaches so much, they need to experience it for themselves to truly understand.
Let me give you a recent example, Lauren received a cell phone for her birthday last year and it came with plenty of rules and stipulations. 🙂 Like most tweens, she takes plenty of selfies and was at the point where she would need to delete some pictures or pay extra for more space. She choose to pay an additional few dollars per month for some more space. This wasn’t necessarily the choice I would make, but I respected her decision because I knew she valued those pictures as most young girls would. A couple days later, she changed her mind and deleted a bunch of pictures. While her pictures did mean a lot to her, she realized that there were lots of pictures that could be deleted, allowing her to still keep pictures she valued and put her money towards her priorities. It is these experiences that help her make confident choices with her money now and in the future.
One myth I regularly hear is that kids don’t care about money. This is has not been my experience. I’ve spoken to many groups of children, from elementary age to high schoolers, and they were all eager to talk money with me because no one else would. Please talk to your kids about money and make sure they develop strong money life skills. It will be one of the greatest gifts you can give them.
Did your parents teach your money life skills? What money life skills are you teaching your kids?
Shannon
SHANNON RYAN, CFP®
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