Do you ever catch yourself falling into negative financial habits that you learned from your parents? The truth is that the “money scripts” you use to make financial decisions as an adult are almost completely formed by age 7. So, some of the good and not-so-good habits you find yourself dealing with as an adult have likely been part of how you view money from the time you were a kid. So how do you raise financially empowered children?
Even though it’s not possible to go back in time and reverse the financial habits you learned from parents and mentors, it is possible to focus on raising your daughters and sons to be financially empowered and to focus on positive money habits.
There’s no “perfect” way to teach your kids about money, but there are a few things you can start implementing today to make financial conversations easier, and even exciting, for your kids:
1. Be Open With Your Children
The first and most important piece of advice I give my clients who are parents is to be – and stay – open when you talk about money. This means having honest conversations about financial “wins” and mistakes with your children, your partner, and the other people in your life. The more you can focus on taking the negative stigma away from money, the more you’re showing your children that financial conversations aren’t something to be ashamed of, or shy away from.
An easy way to start this is by having family meetings about spending, or how you can align your spending with your family values. Giving your children some say in where funds that have been earmarked for charity go, or discussing how some “extra” expenses will have to be carved out of the family budget if you all want to spend the time and resources to have a fun family vacation, can help them to start understanding the importance of open communication.
Of course, make sure the conversations you’re having are age-appropriate. Talking to your four-year-old about the fear you feel about retirement savings or your student loans may not be the best move, but walking them through budgeting basics and values-based spending absolutely makes sense.
2. Ask Your Children Questions
Let’s get real – as a kid, money can be super fun. They don’t have bills, debt, or the stress of whether or not a trip home to visit family for the holidays is a more important budget line-item than a much-needed getaway. Nope, kids get all of the fun parts of personal finances without a lot of the extra anxiety that adulthood brings to the table.
So, during this season where money is still exciting and fun, focus on making it a learning experience for your kids. The easiest way to do this is to ask questions about money often. You don’t have to force the conversation, but working financial questions into your regular conversation with your kids can be a huge help. A few questions you might want to ask them are:
- Why is that purchase (new toy, gumball, etc.) important to you?
- Where would you like to give your “donate” funds?
- What’s more exciting for you (when presented with two spending options)?
- What are you saving for? Why?
- What would you do with $100?
- How do you want to budget your money?
- Where does money come from?
- How do you want to earn money?
- What chores do you think are worth more in your allowance? Why?
Pushing them to think more deeply about their finances can open up a lot of fun conversations about money, work, and life. You might be surprised by some of their answers!
3. Empower Them to Make Financial Decisions
Making all of the financial decisions your kids will face for them robs them of the chance to learn, or to have the exciting feeling of making a choice about their own money. Focus on big and small ways that you can empower them to make their own financial decisions. The more they practice this now, the more likely they’ll continue to make positive, values-based decisions in the future as adults.
- What they want to use their allowance for
- How they want to budget between spending, saving, and giving
- Where they want to give their money (if that’s part of their budget)
- What they’d like to ask for birthday or holiday gifts
- What type of gifts they’d like to purchase for others
As your children get older, they can be given more and more decision-making power. As they keep growing, you’re going to run into situations where they make mistakes – or where their decision doesn’t match the same one you’d make as their parent.
In these situations, it’s important to approach your kids with curiosity – no matter how old they are. Work to get a deeper understanding of what’s motivating their decisions, and talk to them about balancing immediate wants (like impulse purchases) with long-term benefits (like saving for the toy they actually want that’s a little more expensive).
4. Celebrate Your Children’s Wins and Guide Them Through Learning Experiences
Do you ever wish someone was there to celebrate you every time you hit a savings goal (besides your financial planner, of course)? How about when you knock out a big chunk of your debt? Positive reinforcement and affirmation that we’re having financial success is a really empowering and motivating thing. If you want your kids to continue making exceptional decisions with their money, celebrate their wins! Talk to them about how proud you are of them, or how excited you are about the recent success they’ve had.
On the other side of the coin, don’t hesitate to address any money mistakes they may make. Talk about these mistakes as learning experiences, not moments to feel shame or hide from others. The more you can empower your kids to view financial mistakes on a small scale as something to learn from, the more likely they are to move on from big financial mistakes in their adult lives feeling stronger and better equipped to avoid similar pitfalls in the future.
Teaching your children about money is incredibly challenging, but so worth it.