Today I’m going to debunk another popular myth when it comes to teaching kids about money. I’ve heard multiple reasons why parents can’t teach their kids about money. Usually it is some variation of lack of time, lack of curriculum and perhaps, the biggest reason of all: lack of knowledge. Many parents look at their own financial situation and don’t feel they are the best teacher for their kids. Here’s the truth: You don’t need to be financially literate to start teaching your kids about money. You can become financially literate together.
I understand your discomfort. It’s not always easy confessing our money mistakes to our kids. At the same time, I respectfully say get over it. Sorry to be so blunt, but a little discomfort on your part is a small price to pay when your child’s financial future is on the line. I fully believe one of the biggest factors in our children’s overall financial well-being is their ability to make good decisions with their money. And the best teacher is YOU.
Why Parents Are the Best Money Teachers
I know many want financial education to become a part of our school system, which I would love to see as well. However, regardless of whether or not your school offers such courses, now or in the future, parents will always remain the best teachers. Why? Because our kids are always observing us.
Of course that means we may have to un-teach our kids some things as well. The point is teaching kids how to use their money wisely is more than just knowledge or a class for them to pass. This is not an argument against financial education in school. I would love for it to become a core part of our curriculum. It’s a desire for both. Financial education is hands-on and needs to be seen in action, consistently and long-term.
Children need to be taught how to create goals and to align those goals with their values and dreams. The people best suited for this is Mom and Dad. My girls don’t live with their teachers, so they don’t get to see them make daily decisions to honor their goals. They don’t go to the store with their teachers and explain why they choose to spend more for some items and less on others. Your kids look to you to be their money role models.
Never forget you hold the greatest influence over your children. Take advantage of that influence and power to help your kids develop a healthy relationship with money.
Turn Your Money Mistakes into Lessons
Now onto the greater issue—most parents don’t feel qualified to be the money teacher. All they see are their mistakes. Well, guess what? Everyone makes money mistakes. Financial literacy does not guarantee that you will never make a money mistake again. It is not teflon against money mistakes.
Kids become aware pretty quickly that Mom and Dad are human and have made mistakes. I encourage you to use them as lessons for your kids, instead of hiding them. Be honest and share with them:
- Why playing “keep up” is a bad idea.
- The dangers of living beyond your means.
- How debt robs you of choice even though it initially seems like freedom.
- How mindless spending kept you from the things you truly wanted.
Again these are not sit-down lectures you need to have with your kids. But stories you share when you go shopping with them or as you coach them to manage their first budget or when you help them set their save, spend and share goals. Kids like to learn about your mistakes, not so they can lord them over you later, but because they know they can turn to you when they make their own mistakes.
Learn and Become Financially Literate as a Family
There is no unwritten rule that you have to be financially literate in order to teach your kids about money. You can learn together. In fact, it can actually be a lot of fun to go on this journey as a family. Sometimes parents tell me they want to wait until they get their finances in order. Again, I understand why they want to do this but strongly encourage you to instead learn together. The sooner you start talking to your kids about money, the better.
We Have this Little Issue Called Debt to Eliminate
As hard as it can be to talk about past money mistakes, it can be downright terrifying to talk about existing money mistakes with our children. I find parents who are the most resistant to talking to kids about money are currently dealing with debt. So how do you handle this? By being honest and upfront.
Consumer debt is a common problem and one that continues to grow. One of the biggest reasons you want your children to become financially literate is to help them avoid unnecessary consumer debt. You may be tempted to wait until after you eliminate your own debt to talk to your kids, but please don’t. Kids need to understand the dangers of consumer debt and can also be your biggest supporters as you work towards financial freedom.
Before you talk to kids about family debt, make sure you have a plan in action or ready to put into action to eliminate your debt. The more uncertain you seem, the more uncertain they will be. You want to appear in control and confident that you can eliminate debt and be crystal clear as to why being debt-free is worth any potential sacrifices you (and they) have to make short-term. For more guidance, please read my series on talking to kids about debt.
Financial Literacy is a Moving Target
Financial literacy isn’t something you ever completely master or really complete. You always learn new things whether it’s a new investment vehicle or a different way to look at your finances. Most importantly, it’s something you can do together as a family.
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