Let’s get real: parents are human beings, so we make mistakes. Sometimes we accidentally say or do things we’d rather our kids not witness. Unfortunately, more often than not, they do. Our kids are always observing us, including how we manage our money.
Throughout my career as a financial advisor, I have sat across my desk from clients of varying wealth, and one common denominator was the role their parents played in how they viewed and handled their money.
Think about that for a moment—what are your memories of your parents and money?
Did they fight over it? Complain about their lack? Feel guilty for having too much or too little? Or say, “Don’t tell your Mom or Dad that I bought this.”
Perhaps, they instead told you money was a gift. They aligned their goals with how they used their money. And taught you how money works without judgement.
How are you following in their footsteps?
Fortunately, it is never too late to change your behavior. You have a wonderful opportunity to influence how your kids think about money. How you children view money may not seem important, but it is. Even if you teach your children how money works, they will still have a difficult time making smart money decisions if they lack emotional competence. How money makes them feel matters.
This is critical. Your family goal should be something fun and achievable. It will supply you with a ready answer when your children get the “I wants”. But most importantly, you can show your kids how to align their money decisions with their goals. When you’re at the store, acknowledge things that catch your attention, but let your kids see you chose to honor your goals instead.
I understand that you need to discuss financial matters with your spouse and sometimes those discussions can get contentious. I’m not suggesting you don’t have those conversations but have them when your children are not around. It’s stressful for kids to see their parents fight, and sometimes they misconstrue arguments into something more than a lively conversation. They equate money to stress and fighting.
How do you talk about money in front of your kids? Pay attention. Don’t complain about lack, instead express gratitude for the things you do have. When you tell your kids “no”, please refrain from saying, “We can’t afford it.” It may be a true statement and you shouldn’t buy the item, but the words are scary, particularly to young kids who can be very literal. The better answer is, “I like that toy too. But remember we’re saving [insert your family goal] which is so important to me, and I can’t wait to [insert family goal] with you.”
Once you master these three steps, you’ll be a good financial role model, helping your kids view money in a positive light. Now they are ready for the next step: handling money. If you need help, my new downloadable workbooks provide five targeted lessons to help you raise Money Smart Kids.
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SHANNON RYAN, CFP®
Thankfully, after a few years of spending money like my mother, I learned how to save, how to be thrifty, frugal and intelligent with money. My wife and my thoughts about money are almost perfectly in line with each other. We can't wait to teach our children how to use money the right way!