Rethink How You Teach Your Children About Money
Money is one thing that will follow your child throughout life forever. Children are hyper-focused on various different things throughout life – sports, friends, school, whatever the current pop sensation happens to be – but all of that changes as a child grows up and assumes more responsibility. What doesn’t change? Money. Everyone always needs money.
So why do we avoid talking to children about money? Why is it that parents will tackle so many other hot-button issues, like gun violence and drugs, before discussing money management? Personal finance should absolutely be taught at home – but some parents are going about it the wrong way.
Teach Math, Not Money
Many students take finance courses at some point in their education, and studies have shown that these students show higher rates of financial literacy, but they don’t necessarily exhibit better financial behavior. However, students required to take extra math courses were significantly better with money management later in life. If you’re comfortable with numbers and statistics, you’re more likely to have a good grasp on credit, debt, and investing – it’s that simple. Instead of bombarding a young child with the details of checking accounts and interest, help them develop strong math skills.
Teach Them “Just In Time”
The Wall Street Journal describes a great tactic for teaching financial lessons: waiting until it’s just about time for them to be applicable. You don’t need to explain an auto loan, interest, and depreciation to a seven-year-old. But a fifteen-year-old getting ready to buy his or her first car? That information is going to stick, because it’s applicable immediately instead of years in the future. The WSJ article also suggests teaching kids about savings accounts and budgeting right before a birthday, when a child is likely to get a lump sum of money from relatives. This way, they have an immediate situation to apply the lesson – experiential learning at its best!
The majority of people learn about money from their families very early on, but much of that knowledge is second hand. My parents never talked about money in front of us, but we knew there wasn’t much of it – we could tell by the way my mother got very anxious while paying bills, or the way my dad carefully calculated our grocery total as we placed items into the cart. Parents don’t want to pass their nervousness about money onto their children, and discussing the details of your money situation in public is not considered polite.
But I will never forget when, as I was trying to figure out how to pay to study abroad in college, a friend with very rich parents said to me, “Ask your mom and dad! Parents always have a ton of money hidden away that they don’t tell you about.” Her attitude toward money was radically different from my own, and might have been different if her parents had taken the time to discuss why they had extra money hanging around, and that not everyone has the luxury of disposable income. Talk to your children about net income and why it’s important to save money for the future – you don’t have to go too deep in the beginning, but the simple act of explaining why you reach for the off-brand toilet paper in the store can help them understand your financial decisions a bit more.
The bottom line is that while personal finance courses are certainly a good thing, having solid math and critical thinking skills will probably help your children lead financially healthy lives in the long run. Don’t be afraid to admit financial mistakes and tell your kids what you did to fix it, either – removing the mystery of money is half the battle!
Janelle Witting manages social media for Michigan First Credit Union, connecting important financial issues with the realities of day-to-day life. When she’s not filling her head with useless trivia, you can find her reading books, watching dorky television, pretending to work out, or playing with her perfect dogs.