Raising Financially-Minded Children

A few months ago, my wife and I were blessed with our first child. With a career in finance helping people prepare for the future, I began considering the best ways to help my child avoid the common pitfalls for Americans first starting out on their own. Granted, I have several years before my son will be on his own, but the earlier you start, the less work and worry you have along the way. My wife and I have been talking about helping him develop a strong work ethic so he not only knows how to work but also understands the satisfaction of finishing a job and completing a project.

Development of these charactistics starts at a young age. By starting the conversation early, children develop these important habits internally and become self-motivated rather than needing a constant push or reward. It is important to help them understand how to be financially stable, so that no matter what happens in life, especially after parents are gone, they know the right paths to follow. It’s not simply giving them financial stability, but giving them the knowledge of how to be financially stable.

Teaching your children to handle money properly and to make money efficiently will do much more for them than leaving them a large inheritance. People who have money problems because of poor choices will always have money problems, whether they make $30,000 per year or $100,000. The majority of American parents do not pass on financial knowledge to their children simply because they don’t feel qualified. They surmise that since their own financial situation isn’t good, sharing what they have learned with their children won’t help. Instead of talking through mistakes and teaching basic financial skills, the tendency is to complain about their woeful financial picture.

Children pick up on this. They began to think money is a problem and therefore develop fear or anxiety regarding money. This was part of the problem parents have with money themselves. For generations, money was a taboo conversation topic, even among immediate family members. Do you remember hearing your mother and father discussing money or finances when it wasn’t a negative situation? The simple act of including your children in financial discussions at a young age goes a long way toward helping them be comfortable and confident about finances in the future.

Some people worry that talking about money with their kids at a young age may cause them to say something or ask something embarrassing around others, but isn’t a little embarrassment worth a lifetime of financial security and reduced stress for your children?

Financial stress is one of the leading causes of divorce and anxiety. If the simple act of discussing financial matters with your kids will give them a solid understanding of how finances work and reduce their stress throughout their lives, is it not worth the awkwardness or embarrassment you experience in the short-term?

The best time to start conversations with your children about finances is now. Not only will those conversations benefit them and their future financial journey, it will benefit you as well. One positive bi-product of being intentional about financial discussions with your children is the opportunity to think through your own finances and see them in a more positive light. The more you talk with your children about money matters, the more likely you will follow the same advice you are giving your children. Just as “practice makes perfect,” you will see a change in the way you handle your own finances and, in turn, you will become a better example for your children.

**Adapted from ONE Magazine