Families can avoid pitfalls when teaching children about earning, saving and spending
In raising kids and teaching them solid values, the old axiom “Actions speak louder than words” remains relevant today. Money issues can be the most perplexing for families, and parents have a short window of opportunity to pass on the lessons and principles that will carry kids into adulthood. Unfortunately, money issues are also an aspect of family life where many parents are likely to communicate the admonition, “Do as I say, not as I do”.
Here, we unpack five money myths to avoid:
Myth #1 – Greenbacks grow on trees
We want our children to appreciate the value of money and to recognize that it doesn’t just “grow on trees”. Yet, parents are often guilty of using money as a path of least resistance. We may try to avoid giving in to their impulses. But due to less-than-ideal circumstances and timing to teach the lesson, or to avoid a meltdown in the grocery store, we reach for our wallets. And when we do we feed the myth that money does grow on trees. Kids need to know early on that money is earned, and its use most often involves tradeoffs.
Myth #2 – You can get “paid to play”
Parents desperate to motivate their kids to work hard in school sometimes offer money to reward good grades. This can create the expectation that any form of behavior is for sale. Rewarding good behavior with money can skew what should be expected from our children while diminishing their ability to value their own self-worth. Paying for work, as in weekly chores, is appropriate, but paying for expected behavior can be counterproductive.
Myth #3 – You can say, “I love you” with money
It’s not uncommon for parents to become guilty over the lack of time and attention they can give to their children due to their busy schedules. To “compensate” their kids and ease their own guilt, they will sometimes use money or material things to replace the lost love. If it happens often enough, children will begin to associate love with money, which, should the money ever stop, will make them feel unloved. It can also lead to resentment as the kids mature and realize that their parents have substituted money for quality time and attention.
Myth #4 – Nothing to see here
Parents have suffered through difficult economic times in the last few years, causing stress around the kitchen table. Although most parents try to insulate their children from financial difficulties, kids are highly intuitive and often pick up on their parents’ anxiety. Without at least minimal communication on family money matters, kids could begin to take on the pressures felt by their parents without understanding the cause. If nothing else, bringing your kids into the conversation can ease stress by enlisting their cooperation during difficult financial times.
Myth #5 – Money can buy happiness
Some people might quietly admit that, at certain moments, having money can make them happier. Who doesn’t feel uplifted when they get a big bonus or can splurge on a nice vacation? For the rest of us, more money and spending doesn’t necessarily improve our happiness. Living a good life doesn’t have to depend on having more money; it depends on knowing how much money is needed to produce the situations that result in a good life.
Teaching kids about money at any stage takes time on the part of the parent. But the payoff is worth it when children know how to successfully manage their money when they get older. Alpine Bank offers Mind Your Money, a free online, self-paced financial literacy program that can help parents and their families with money matters.