Why Financial Independence Starts Early
Did you have an allowance when you were a child? Did you put an allowance in place when your children were young? Or perhaps you didn’t have children but watched nieces/nephews and friends’ children learn about money, or not? It’s kind of scary to realize, but super important to understand, that 95% of the time we have with children is gone by the time they turn 18. And squeezing some money conversations in during that impressionable time has the biggest influence on their future money habits.
What I Wish I’d Realized Sooner About Teaching Money Habits
I feel like this is one of those “I wish I had realized sooner” moments. As adults, we don’t realize the vast impact we have on children and their future. If you have ever asked children about particular memories from their childhood, they often recount an incident that stuck with them but often the adult in the situation barely or doesn’t remember it at all. I remember a phrase my father said to me as he passed me in our house as I was practicing typing (yes, way back when we had typewriters!): “You’re never going to get it!” And he kept walking.
Think Before You Speak. Think Before You Buy.
I asked him about it years later, thinking about how disappointing that comment was to me, and he didn’t remember that he even said it. Sometimes, when we say things off the cuff, they get remembered by the other party in an unintended, hurtful way. Think before we speak is a good mantra.
Just like Think Before You Buy is a good mantra. I met Karen Holland, Founder of www.GiftingSense.org last year, and she designed a Does It Make Sense (DIMS) calculator that helps children think before they spend. Whether it is a thing, an experience, or a pet, the calculator walks a child through questions that help think about all the angles (not just financial) of making a purchase. We would all be served well with that habit at every age!
Why Allowance Is a Powerful Financial Teaching Tool
Or I started this topic with questions about allowance. What better way for kids to learn about money decisions than to practice using money. And allowance is one way to provide some of that “tool” they need to practice with. My friend, John Lanza, wrote a great book, “The Art of Allowance,” to help parents learn about the best way to approach allowance for their family. Every family is different!
Or better yet, if you are looking for the full philosophy and how-to guide for parents/grandparents, check out The Wisest Investment: Teaching Your Kids to Be Responsible, Independent, and Money-Smart for Life by a colleague, Robin Taub. There are so many tools to share. I’m hoping your adult children are open to resources or often grandparents are very involved with raising grandchildren these days. In hindsight, I wish I had intentionally “dripped” on our kids to practice their money skills more before leaving home.
How Grandparents and Parents Can Start the Conversation About Money
As older women, we’re in a unique position to spark financial conversations without lecturing. Start with stories. Use real-life examples to open up conversations about spending, saving, and earning. Even sharing a money mistake can be valuable if it helps the next generation avoid it.
Even just looking for story opportunities to share with grandkids can have an effect. Did you witness a good or bad money decision? Are important concepts like earning income, saving for a rainy day, and “sleeping on it” to experience delayed gratification something you could incorporate into your next conversation with grandkids?
It’s often interesting to just throw out a softball question to ask what they think (or know) about various topics. Their concept of how much anything costs is often pretty hilarious for the young kids. One of our preschooler grandchildren recently told us it cost sixty thousand dollars for the bike she got for her birthday. Just like another one guessed that maybe I was 100 years old. Your stories can shape how children see money, work, and self-worth.
Play-Based Learning With Pretend Spending and Real Lessons
Even playtime can offer valuable money lessons. Even using play money for pretend play or the concept of using a credit card is pretty interesting to see what the grade school agers understand. My 9-year-old granddaughter recently used the DIMS calculator to realize that buying a new puppy to replace the 11-year-old dog they just lost would cost more than she imagined, about $25,000 over the course of its lifetime. She quickly moved to considering a $60 leotard for her gymnastics class (that she would also pass down to her sister and then sell it second-hand).
Money Wisdom That Lasts a Lifetime
Never underestimate the power of your words and stories as a grandparent/aunt/respected adult in a child’s life. Sharing more of what we wished we had known sooner can be a blessing that lasts a lifetime.
What can we do as parents, grandparents or family/friend adults in children’s lives to help them practice healthy money habits? If you had to pick one money lesson you wished you had learned earlier in life, what would it be? Let’s keep the conversation going and help the next generation build confidence, independence, and healthy money habits.
Marie Burns is a Certified Financial Planner, Speaker, and Author of the bestselling Financial Checklist books. Find Marie on Facebook or contact her at Marie@MindMoneyMotion.com.
This article was first published at 60 and Me – a community that helps women over 60 live happy, healthy and financially secure lives.