It’s a fact, money talks. As parents, it is our responsibility to teach our children the language of money. We must help them understand its positive and negative callings. We must train them to beware of money’s potential pitfalls and be aware of its positive power. We must teach them financial responsibility.
The only way to learn about money is to have hands-on practice. Giving your child an allowance, encouraging her to work to make her own money (i.e. babysit, mow lawns, shovel snow), or allowing her to keep her birthday money are several of the many ways that you can ensure that your child has cash to “practice on.” An allowance will make your child financially responsible for his purchases. (She won’t ask for another two dollars every day to buy snack from the canteen. She’ll learn to live within the weekly amount.) Encouraging your child to make her own money promotes a healthy work ethic, which teaches your child that it’s healthy and gratifying to roll up your sleeves and work. No matter which money method works for you, make sure to teach your child proper budgeting, because it is a life skill which your child must master in order to succeed in adulthood.
When a child has his own financial resources, he learns that living costs money. It is up to every individual to decide how to spend his money. One can’t have everything; buying one thing is always at the expense of something else. Giving the child money teaches him to live within his income. Of course, it is the parent’s responsibility not to spoil the child with too much money, which ingrains in the child irresponsible spending habits. With a limited, fair amount of money, the child learns the best way to stretch his income and make smart financial choices.
In addition, a child learns the importance of saving money for larger purchases. American culture promotes overindulging beyond one’s means, using payment plans and credit cards to satisfy one’s desire for instant gratification. The message the media conveys is that whatever the heart desires, one is entitled to enquire. This lifestyle has caused so many to drown in debts or live under extreme financial pressure. Training a child to exercise self-control and visualize the future before making rash purchases inculcates within him a positive value system that will serve him well later in life.
Don’t discuss money too often, just like you don’t overdo other important topics. At the same time, from time to time, do engage your child in a discussion about prudent financial strategies, because money without proper financial literacy is damaging to anyone-especially a child.
- Teach your child the importance of being a smart consumer.
- Explain to her the advantages of developing a nest egg.
- Show her how deceptive advertisements are – and just because the advertisement says you can’t live without something doesn’t mean that the buyer has to abide.
- Discuss with her the advantages and disadvantages of buying on credit and how and when to do it in a wise manner.
- Ensure that she understands the values of prioritizing, waiting patiently and acting prudently with regard to all money matters.
As a parent, model a healthy relationship towards money, so that your child will emulate you. Show him how your self-worth is not dependent on your salary. Let him know how wonderful it is to share one’s assets by letting him know about giving charity. Let him see that you are at peace with how much money you have. Teach him that money is not everything. You do not fight about money. You do not become overly obsessed with it. Make sure to convey that relationships and values do not have a price tag. They are the most precious currency.
The famous marshmallow study proved the long-term advantages of teaching fiscal responsibility to children. In the 1960’s, psychologist Walter Mischel developed a test of emotional self-control that involved offering marshmallows to the four-year-old children of Stanford professors, graduate students and employees. The kids were brought into a room at Stanford one by one and given a marshmallow. They were told they could eat it then, but if they wait for about twenty minutes, until the researcher returns from a pretend errand, they would receive two marshmallows. Researchers observed the children through a one-way mirror. Some of them were able to wait the twenty minutes until the researcher returned and then received their second marshmallow. They found ways to divert themselves from thinking about the marshmallow: some covered their eyes so they wouldn’t have to see the treat; others rested their head in their arms, played games with their hands, sang songs or even tried to take a nap. Others consumed the marshmallow as soon as the researcher left the room.
Fourteen years later, the kids were interviewed. The results were dramatic: the kids who were able to wait for the second marshmallow were, as eighteen-year-olds, more socially competent, less likely to collapse under stress, better able to deal with challenges and more self reliant, and on average, they scored 210 points higher on their SAT tests than those who were unable to delay gratification!
Why were some of the four-year-olds able to figure out that it was in their best interest to delay gratification while others were not? And why did learning self-control at age four have such a dramatic effect on their lives as adolescents? The answer, in a word, is reflection. Parents taught the two-marshmallow kids to reflect on their feelings in terms of their choices (“I can have one now, but I can have two later.”), values (“I prioritize long-term over short-term satisfaction”) and consequences (“I will satisfy my hunger better if I wait versus satisfying it temporarily if I eat one immediately”). These lessons lasted throughout the child’s lifetime.