If you think your kids understand the correlation between your behaviors and your finances by watching what you do, you’re wrong. You must connect the “what” you do to the “why” you do it.
“We save and invest money, and we don’t live a lavish lifestyle. Our kids saw that, and they know the importance of fiscal responsibility.”
This is what I often hear from parents. But what these parents don’t realize is this thought process of, “We made wise financial choices, therefore, our children should understand how to make sound financial decisions too,” does nothing to educate your children. In fact, this mindset can have just as negative of an impact on a children’s financial literacy education as a parent making poor financial decisions.
As parents, we should never assume our children notice the financial lifestyle choices we are making, nor might they recognize the alternatives. It is important to keep in mind that our children are observing everything through the eyes of children, and not through the lens of an adult. After all, it’s unlikely they will comprehend how simple choices can have major payoffs.
For example, if we choose to brew our coffee at home every day instead of purchasing coffee daily at a coffee shop, we understand that we are making a smart financial choice that will save us money. However, children don’t make this connection as easily as adults do. That’s why it is so important we discuss our financial habits and choices with our children on a regular basis.
It’s also imperative these decisions and conversations have a visual component to them as well. Children need to see what choices you are making to fully grasp the lesson.
One great way to do this is by choosing to pack a lunch to take to work every day. With the money saved, parents can place cash into a vacation fund jar in the family’s home. Children will then learn that by eating out every day, their parents’ financial choices were prohibiting them from traveling more as a family. By putting the money saved each week into a vacation fund jar, your children will see how their parents’ financial choices benefit the family.
There are several other ways you can explain to your children how everyday financial decisions help to save money. Explain how cleaning your own home versus hiring a maid, mowing your lawn instead of outsourcing a service and purchasing the generic instead of brand name items at the grocery store boost your savings.
Of course, in the digital age, this lesson can be a difficult one to teach.
With conveniences such as Apple Pay, online billing and debit cards, it can be tough for a child to grasp the financial choices and trade-offs their parents are making when they cannot visualize them. It can be especially difficult when making purchases that require online checkouts, such as flights or hotels.
Therefore, whenever possible, it’s great to implement visual components -- such as charts or money jars -- to supplement the conversations you have with them as well.
Whatever you do, parents must learn that our financial behavior is normalized in the eyes of their children. Whether you are making wise or poor financial decisions, children will not recognize the difference or know any better. Instead, let’s start talking to our children about our everyday choices that impact our finances and instill these positive financial habits in our children from a young age. It’s never too early to teach our children about money, children’s money habits are by age seven according to The University of Cambridge.
Want more advice on how to raise your children to be financially responsible adults? Click here to contact me about my complimentary workshop, Raising Financially Fit Families, which I present to groups and organizations of all sizes.
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