Few things start an intense conversation faster than when a group of parents begins to ponder, “How do I teach my children about money?”
This question came up recently during lunch at an all-day EOS training session, and almost everyone seems to struggle with it.
After several years of experimenting with my own 16 year old daughter, Morgan, we recently had a breakthrough. Morgan said, “Dad, I appreciate that you’ve tried to teach me about money, but it didn’t really make any sense to me until you and Mom made me buy all the gas for the car.”
Well, now she is a negotiating demon over everything she buys! She even negotiates with her mother and me over who pays for what. We still have a long way to go, but she’s starting to get it.
When I was a kid, being one of eight children, we never had money unless we earned it in after-school jobs. We learned from an early age, perhaps 10 or 12, how working hard brought precious cash.
When I was twelve, my father helped me set a goal of earning enough to buy my own Browning Auto 5 shotgun, $199 from Sears. Every week he gave me special jobs, and I watched the money accumulate painfully slowly. I recall calculating that at $10 per week, I would not earn enough to get the gun before fall dove season, so I asked for more work. Eventually, I got the gun and still have it now, even though I rarely go hunting any more.
Forty years later, the hunger and determination of my youth have grown into a drive for the affluence that my Dad dreamed of for us. While we aren’t “rich” by any stretch of the imagination, the college education he and Mom worked so hard for was attained by all eight of us, and we’ve all gone on professional careers and steady incomes.
Now, our generation’s children have heard, but not related to, the “rice and water for dinner” stories of our youth. In an age when most families order takeout or eat in restaurants at least twice a week, our tales about hard times and shoestring budgets just don’t resonate with our kids. Our own success is an unrecognized enemy in teaching our children about money.
So how do we deal with this? My years of trial and error with my daughter have led me to the following conclusions:
1) If we don’t teach our own children about money, we are setting them up to fail. No one else will teach them. Our schools do not teach children effectively – it is a parent’s job. When I was in college, my degree in business did not require a course in personal money management, but I was fortunate to find one my senior year. I’ll require my daughter to take one, as well.
2) Our parental urges get in the way of success in this effort. We all have painful memories of our childhood, and we all want our kids to have it better than we did. That very urge often makes us spoil and coddle our kids so that they won’t suffer the same humiliation or pain as we did. Unfortunately, humans only seem to learn from painful lessons, and learning about money is no different.
3) Connecting with a kid on his own level is essential to getting the message across. Funny how this worked with me and Morgan. We are both fans of The Hunger Games series of books, and Morgan identifies with Katniss, the young heroine. I identify more with Haymitch, the grumpy trainer. I asked her, “Would Haymitch have been doing Katniss any favors if he hadn’t been so rough on her?” Morgan agreed that it was Haymitch’s rough instruction that prepared Katniss for success in the Arena. So, I told her that money was a rough lesson she really needed to learn to be successful in the Arena of life. She got it!
4) A teenager with a bank account must be required to balance it. We gave Morgan a debit card a year or so ago, but we force her to keep a manual checkbook, to earn funds, and keep up with the deposits and withdrawals. We’ve had stern discussions on the inevitable occasion of a bounced check, making her pay the $35 charge, equating it with a full tank of gas wasted.
5) A kid should be required to pay for something precious – early and often. With me, it started with my first shotgun. With Morgan, it’s the gas for her car. Unless we connect getting what we want most with earning the money to pay for it, kids will never realize the necessity of managing what they spend.
6) We must make it clear that the date of “money independence” is approaching. Whether at high school graduation, college graduation, or in a slow and steady weaning process in between, we must make it clear to our children that they will soon be fully on their own, and their parents will not bail them out. I loved the song by Blood Sweat & Tears: “Mama may have, and Papa may have, but God Bless the Child that’s got his own.”
7) This process is a long haul. And I don’t pretend to have it all figured out, but I can share some resources I’ve found that can help. I’ve posted below some links to great websites that have full plans and courses for teaching kids about money. I am going to give Morgan assignments to study from these sites, and require her to report on them, perhaps in a summer term paper. Maybe I’ll even pay her if it’s good enough to publish in this newsletter!
We focus our children on academic achievement, getting them tutors for subjects in which they need help, and this is very important. But equally important is preparation for real life, and everyone is going to have to do battle in the “Arena” of money. The sooner we get busy preparing our children for it, the better.
Resources on Kids & Money
Secret Millionaire’s Club with Warren Buffet
More than 25 animated “webisodes” featuring Warren Buffett, designed to teach children (and their parents) about money; how to be entrepreneurial, how to make more money, how to keep more of what you make, and how to invest.
Money As You Grow
Twenty essential, age-appropriate lessons on money for customized for five age groups from age 3 to early 20’s. Provided by the President’s Advisory Council on Financial Capability.
Money 101 from CNN Money
See Lesson 12: “Kids & Money.”
360 Degrees of Financial Literacy
Full financial literacy in one site courtesy of the American Institute of CPAs. Click on “Life Stages”, then “Tweens & Teens” for lessons for kids.