One of the trickiest challenges I’ve faced as a parent has been figuring out how to teach my children about money. I’m not just talking about the basics such as where it comes from and what it’s worth. I find it particularly tricky teaching the secondary aspects of money such as concepts of rich and poor, greed and charity, or spending and saving.
I’ve tried to write down a few of the ideas that I think might be helpful to other parents who are trying to teach healthy attitudes toward money to their children. In these times when monetary concerns are common in many households and in the media, it is more important than ever to help children make sense of the way money works in our society.
1. How money is made – Despite the wall street magicians and the get-rich-quick scams, money is created when someone does something of value for someone else. Every time I heard “daddy, stay home, I do not want you to go to work today” it was an opportunity for me to say “I have to go to work to make some money to buy you food and pay for the house and get you trips “. This let the kids know that I was going to work for money for everyone’s benefit and made separating a little easier.
But just equating work with money is not always enough. If your work is hard to understand or complicated to explain use other examples. I remember one day when my daughter was approaching her 5th birthday, she was very sad and said that she did not wan’t to have a birthday. My wife and I were very concerned about this. Finally she said “I just do not want to grow up because I’ll have to go to work and I do not know what to do at work. what to say to all those people on the phone. ”
Because my wife and I do a lot of our work at desks in offices, it was very hard to see what we actually did. I realized we needed to give her concrete examples of ways people made money that she could grass.
This message can be reflected in so many “teachable moments” every day. From street sellers, to waiters, to fashion designers, actors, almost everywhere you go, you can point out different ways people are working and making money. This kind of universal exposure to the vast variety of occupations gave our kids the confidence that they would certainly be able to grow up and find something they loved to do in order to make money.
At some point (and our kids are just at that age) you can get your kids to propose jobs for themselves to do in order to earn their money themselves. We do not give out allowances, but we’ve started to reward specific jobs around the house with small amounts of money.
2. What Money is worth – The only way to teach kids what money is worth is havin them earn it and spend it. When they begin to realize the effort in terms of work that it takes to create enough money for some material goal they begin to understand what money is actually worth.
I like the concept of money as energy. I put my energy into my work, or my children put their energy into washing the dishes and all that energy gets turned into money. They can then give that money to someone else who put their energy into something.
When we are at the produce store buying carrots for example, I point out the prices and we talk about supply chain economics in simple terms. I tell my kids about the farmers that grow the carrots and point out that we have to give them money for their hard work. But it does not end there, I point out that someone else probably picked up the carrots, and a truck driver drve them to the store, and all the people who work in the store, and I point out that the reason we pay money for the carrots is for all of those people and all the energy they put into those carrots.
3. Spending vs. Saving – When I was young the discount stores we still called “Five and Dime” because you could probably get things for that amount of money. But whatever the store is called in your area, it is a great opportunity to teach kids the value of money by having them spend their own money. We’ll go in with a dollar and we’ll go around looking for things that cost less than a dollar. A few trips to the shop and they get to know what a dollar is worth.
But inevitably there will be something they want that costs more than what they have and this is when you get to teach them about saving. This is the hardest thing for children who have really just figured out that money allows you to get things you want.
I make sure to try and take the kids with me to the bank as often as I can, and I try to go inside to an actual person when I have the time (and if my bank does not charge me for it). This gives the kids a real sense that we can not just go around spending all the money we make, but we have to save it for things for later. Taking them on deposit trips is more important than just taking them to the ATM to withdraw money. Although I have found that the ATM is a chance for me to reinforcement that I’m just taking the money out that I put into the bank on an earlier trip.
4. Greed Vs. Charity – Almost as soon as my kids figured out that money could buy nice things at shops, they began to clamor for us to give them money. While we have been able to subvert this greed by making them do jobs for their money, the greed instinct is pretty strong.
Unfortunately though, we are surrounded in our city by plenty of people in need and we make an effort to teach our children about charity in response to this. Again the best teaching tool we have is direct participation. Whenever we have leftover food from a restaurant, we will make an effort to find someone on the street to give it to. I make an effort to have the children put money in the guitar cases of street musicians because I point out how hard it must be to try and make money that way.
There are countless ways of teaching kids about charity, and not all of them involve direct interaction with people who may have drug problems or psychoses. There are in fact safe ways to show children that it is important to be generous, and many of them start with your friends and relatives, and in today’s economy there seem to be more and more opportunities to share with those who are less fortunate.
5. Rich vs. Poor – which brings me directly into the discussion of Rich and Poor. There are two important things I feel it is important to represent to our kids about the concepts of wealth and poverty. Firstly, it is not all about money and secondly, it’s all relative.
It is almost cliche to say that you can be rich with money and poor in life, but it is very true. I break it down into simpler terms for my kids by saying that it’s all about how you feel and how much you want things. Whether or not you have any money, you feel rich if you have everything you want. The easiest way to have everything you want, is to want everything you have. Gratitude and appreciation for the things you have are the fastest road to riches. Your attitude towards your situation is really what determines whether your rich or poor, no matter how much or how little money you have.
There was a fellow sitting on the steps of our church one day with his dog and the two of them clearly looked like they lived on the streets. My daughter asked the fellow if she could pet his dog and while she patted the dog on the head she said to the man “Are you poor?”. The direction of children’s questions cause the man to pause for a moment and then he answered “No, are you?” and I realized, that if the things you want are the things you have (and this guy did not have much at all) then you really are not poor after all.
And on the other side of the equation, I’ve seen some very well off people feel poor because they can not afford to travel in first class on the airplane, but on the same plane other people are feeling rich simply because they got on .
It’s all relative. I often tell my children that no matter how much or how little money we have, there will always be someone who has more money, and someone who has less and you can not focus on other people. It is too easy to be envious of those who have more than you, and too easy to be proud that you have more than others. The most important thing we can teach our children whether we have a lot or a little, is to appreciate what we do have and continue to improve our own situation by working hard, and improve the situation of others by helping where we can.
6. Discretion and Modesty – The last thing I have tried to teach our kids is that money matters should be private matters. They udnerstand from their own experiences how easy it is to be jealous of others who have things they do not. They also know how easy it is to feel sorry for those who do not have as much. Therefore I try to get them to understand that other people have the same tendencies to those same feelings.
If we tell people how much money we have have, other people will automatically compare what they have to what we have and nothing good can come of it. They will either have more than us or less, and either way we are putting them in a bad position of feeling either jealousy of us for having more, or pity for us for having less and it just is not polite to put people in that position.
Ultimately, what you teach your children about money should relect kindness, generosity and appreciation for the abundance of life and I believe you can teach these things about money wherever you have a lot or a little, and frankly, in these uncertain economic times, these lessons are more important than ever.