Start sowing the seeds of financial responsibility and a healthy perspective on life when your children are young.
Finances are usually considered an adult topic. But children and teens also need to learn about this area of life. Ron Lieber, a writer for the New York Times, has written about teaching children to be “grounded, generous, and smart about money” – what he calls “the opposite of spoiled.” Here are six actions he recommends that parents take:
1. Assign your children a monthly allowance, and a place to store it
The amount will vary from family to family; the important thing is that the amount be regular and that it be handled with organization. The money may be kept in a glass jar or in a bank account, but in any case, it should be divided into three categories: spend, save, and give.
2. Talk as a family about money
Parents’ expenses necessarily impact their children, so it is important to talk with your kids about the way family financial decisions are made.
3. Distinguish between needs and desires
In these conversations, it’s important to make clear what expenses are necessary and to explain why, for example, you decide to spend money to go on vacation at a given opportunity.
4. Keep records of their spending
In order to guide your children’s financial activity, it’s important to know how they spend their money, what motivates them to spend, to save, or to give, and how they feel after each action.
5. Find a mentor for financial matters
It doesn’t have to be an expert. It could be someone in the family who has achieved a healthy balance between their finances and their feelings — someone who makes good financial decisions. People who earn less may have more experience with discerning the best way to spend their resources, and can be better teachers regarding what kinds of expenses and donations are most effective satisfying.
6. Keep the discussions on financial matters alive
Find ways to continue these conversations as your children grow up. Be sure that it feels natural: it can be something as simple as explaining your own financial decisions when the opportunity arises.
A key part of financial responsibility is having perspective: knowing that money is a means to an end, and that material possessions can never fully satisfy us. As parents, we must help our children to focus on sources of happiness besides money, such as love, friendship, and play, and we should teach them not to give too much importance to material things. The key is to start early, when our children are flexible and open to new activities, experiences and hobbies.
Knowing how to save and to give to those in need, making progress daily and yearly through hard work, knowing the work that goes into earning a living, and being aware of what we have and how many people worldwide have less than we do, are all important and contribute to a sense of perspective and gratitude. We need to remember that all of us, even the youngest children, are the constant target of marketing that wants to make us feel incomplete if we don’t constantly buy new products. Living with enough but not too much — that is to say, experiencing a healthy austerity — can help us discover that what really matters are the people around us.
These are lessons we should start to teach as early as possible, first through our own example and then more explicitly as our children gain understanding.
Sowing the seeds of financial responsibility and a healthy perspective about money and material things when our children are young is the best way to help them avoid the unhappiness and dissatisfaction caused by unrestrained materialism. It will help them grow up to be more balanced, mature, and happy people.