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How do we teach our kids about money (Part 2)

How do we teach our kids about money? (Part 2)

We Pay Attention to Who They Are!

When I was growing up, my dad used to say, “before you were born, I had this notion of who my children were going to be based on how I raised them. After you were born, I realized there were certain things I would be able to impact, and certain things you were just naturally bringing to the table that I would need to learn to work with.”

Similarly, as a classroom teacher, I learned quickly that there was no such thing as the perfect lesson. No matter how good it was, any lesson I taught was likely going to miss some kids, and all kids would take something slightly different away, even after having received the same lesson. So, I concluded that my time and effort was best spent divided between planning and adapting. Because the kids I taught were inherently different in how they learned and in what they were bringing to the table, I had to spend as much time being responsive to who they were as I was spending on the math concept I was trying to teach them.

While it is extremely important to think about WHAT you want your kids to learn about money, it’s equally important to consider the money (or resource) personalities each of your kids are bringing to the table as you try to set them up for financial success in life.

Do they have natural inclinations towards spending or saving the resources they have?
Do they show a high interest in new things or nice things?
Do they show a high interest in having things that their friends or peers have?
Do they have a natural curiosity about how money works, or are they blissfully oblivious to it as long as their needs are met?
Do they worry or have a lot of stress about money?
Do they show an unwillingness to spend money on themselves, even if they have it?
Are they interested in earning money?
Do they have a fixation on fairness of resource distribution between siblings?
Will they ask you for money if they need it? Does it create feelings of guilt or stress in them when they do?
Do they expect to always receive money from you when they ask?

Opportunities to learn about who your children are in relation to money and what natural tendencies they have towards it are as abundant as the opportunities there will be to teach them about money. The important thing is to take some time to look and attend to what you notice.

Be Cautious About Trying to Change Who Your Kids Are

Pre teen putting money into a modern coin bank at home.

Kids aren’t the same, and no matter how consistently you parent them, they’re each bringing something different to the table. This is another reason why having 2-3 broad values or goals that you want your kids to learn is helpful–it will allow you to see success in a wide range of more specific outcomes.

Teaching against the current of a kid’s natural inclination or personality is a losing battle.

If you find ways to help each of your kids learn the essential lessons you hope for them to learn about money, while working with the current of their personalities, you’re much more likely to end up with adult children who are both financially responsible and financially content.

For example, a parent who is frugal, naturally inclined towards saving, tends to purchase only what they need, and often purchases things used or on sale, might feel very alarmed at having a child who likes the newest, trendiest things and seems to love to shop and spend money. And if that parent spends all their time and effort trying to change this element of their kid’s personality, to get them to want less or spend less, a very likely outcome will be a kid who feels deprived, resentful, and may turn to irresponsible spending (like building up credit card debt) when they become an adult.

But if that parent seizes the opportunity to help their kid find opportunities to work and make money from an early age, to orient their kid towards preparing for a career that supports the lifestyle they enjoy, and helps their kid develop firm boundaries around debt and credit card spending, they’ll set their kid up for their version of financial success. And while staying at a 5-star hotel or buying a very expensive piece of clothing might be a very different choice than the parent would have made, if the core financial values are strong and the kid chooses a life and career path to set them up for that kind of spending, it doesn’t have to be a financially irresponsible choice.

Working With Your Kid’s Personality to Teach Them Money Values

So, after you’ve made your observations about the traits each of your kids has related to money and resource use, take some time to do the following:

Reenvision how the money values you defined in part one and your definition of “responsible” money use looks for each of your kids now, and as adults. Be open to their version of “financial success” looking different from what your own version of “financial success” looks like. What might it look like for each of them?

Be aware of your own biases and judgements. We all have them, and it’s important to uncover them and try, in so much as we possibly can, to set them aside when working with our kids to teach them about money. Consider the parent in the example above – if the parent is convinced that people who spend money on 5-star hotels or fancy clothes are somehow shallow or overly self-indulgent, that’s a bias and judgement that could very easily get in the way of productively helping their kid become a financially responsible adult. Even if you don’t understand your kid’s money personality, and even if it’s nothing like yours, try to set aside any sense that it’s right or wrong. It really is just who they are, you can either help them learn to work with it in a healthy way, or they’ll probably figure out financially problematic ways to deal with it in the future.

Watch out for the kid who is just like you, too. This kid can often be easily overlooked because they seem to be a small replica of you (and for many parents, this feels like a relief). But just because you may relate better to or understand this kid’s approach, doesn’t mean they won’t need your support to develop a healthy approach to their finances. Pay particular attention to the areas of your life where you wish you felt or acted differently around money when working with kids who seem to be just like you. They will often end up having exaggerated versions of many of your financial tendencies, including the ones you wish were different about yourself.

Think of all of this as a Venn diagram, with the shared values and habits you are hoping that all of your kids will end up with as the overlapping part of the diagram, and the individual personalities (and individual definitions of financial success) as the unique/non-overlapping parts of the diagram.

After completing the exercises here, and from part 1, you’ll now have a solid foundation to finally start thinking about how to teach your kids about money because you now know what you are aiming to teach and how that might look different for each of them.

If you’re still working on your own financial goals and would like some support, schedule a call here.

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How do we teach our kids about money (Part 1)

How do we teach our kids about money? (Part 1)

As a financial planner, I’ve been approached by clients (and friends and family) who want advice about talking to their kids about money. But answering the question, “How do we teach our kids about money?” is not as simple as, “Follow these 3 steps, and your kids will be great with money and learn everything they need to know about it.”

I used to find myself flustered trying to answer this question with any level of brevity, and perhaps I still am. After all, this is the beginning of a series of posts on this topic. We’ve all heard the investment guy out there just telling folks to open their kid an investment account, or the random uncle suggesting that you get them into savings bonds, or just some schmuck on the internet convinced that he’s touting silver bullet advice for financial freedom in adulthood. But really, if any of this advice is sound (and let’s not start with the assumption that it is), it’s at best, incomplete. It’s a disjointed, haphazard approach to kids learning about money which might give them a few useful tools, but threatens to leave them without a base of understanding and values to attach those tools to.

Just like teaching anything, teaching kids about money involves a lot of forethought and attention, not just about how to teach them, but also about what you want them to learn.

And the reality is that whether you have any interest in wanting to teach your kids about money or not, if you have kids, you ARE teaching them something about money, not only each and every time they interact with money, but also each and every time you interact with money or talk about money, and they watch and listen.

And just because the question isn’t simple to answer, doesn’t mean we’re not going to try. So, over the next few months we’ll be bringing you a series of posts designed to help those searching for some guidance on how to talk to and teach their kids about money, and we’ll start with that most important of questions:

What do you want them to learn?

One of the basic principles of good instructional design is that you design “what” and “how” you teach with the end in mind. A teacher who teaches a lesson daily without a coherent idea of what end goal they are trying to achieve is unlikely to have much impact imparting concepts that are substantial or lasting on students.

So, when we design lessons as educators, we start at the end and take a 10,000-foot view of the situation.

If our students need to be able to learn these key mathematical concepts by the time they graduate from high school, what do they need to learn by the end of a year in my class?
Then, what are the units I need to teach them these core concepts?
Within each unit, what are the individual lessons that will develop that understanding, and how do we connect these back to the bigger picture?

As you design and teach each lesson, it’s not just about the lesson, it’s always about tying it back to the learning objectives of the unit, the major learning goals for the year, and ideally, if you’re a good teacher, to the things they’ve learned in previous grades and the concepts they will develop in the next ones.

So, naturally, the first question I ask parents who ask questions like, “how do we teach our kids about money?” is, “what do you want your kids to learn about money?” And for many, this can be a harder question to answer than it at first seems. But if you don’t answer it, you risk a lifetime of money lessons that may be, at best, disconnected and hard to hold on to, and at worst, contradictory.

For anyone who is trying to answer the question “what do we want our kids to learn about money?” the exercises below are a great place to start. Even if you think you have a good idea of what you want your kids to learn about money, you may want to do these exercises anyways, because sometimes they can yield unexpected results that may lead you to reframe your major objectives.

Start with what YOU know, believe, and feel about money.

Basic, sound money management is actually pretty simple, but our complex beliefs, feelings, and histories around it can make it feel extraordinarily complex. So, a good place to start when you’re thinking about what you want your kids to grow up learning about money is, what do you believe, feel, and know about money? How do you interact with your money? How did you learn this, and if you had it to do over again, what would you keep as part of your money story, and what would you change?

This list should include everything from ideas and values to behaviors; there is really no idea too big or too small, no thought too fleeting. You don’t even have to sort them into a ‘keep’ and ‘change’ list at first. Just a stream of consciousness exercise where you write down whatever comes to mind when you think about money is a good place to start. Then take a week or two to add to that list every time you catch yourself having a money-related thought.

Some examples of the types of things people write down are:

The point here is that there’s nothing wrong to add to this list. Nothing too big or too small. And I encourage you to take a week or two, observing yourself as you are making a purchase, going to work, getting paid, paying bills, etc., to get as complete of a list as you can. This is a critical place to start. It will help you identify which of these ideas you hope to pass on and which you hope to change in how your kids think about money, but it’s also important because, if you’re not intentionally teaching kids about money, it’s very likely that they’re just picking up on these ideas and feelings and using them to formulate ideas and feelings of their own, possibly perpetuating things that you don’t really want to see passed on to them.

Once you’ve gotten a good-sized list, start to sort it into things you would like to keep, and things you wish were different. This will give you a sense of some of the things you might want to raise your kids to think or feel about money, and some of the things you might not want to be inadvertently teaching them.

Imagine your kids living their best lives as adults.

Once you’ve started to develop a sense of what types of things you would like them to learn about money from exercise 1, take some time to envision them as your definition of a successful adult.

What is their financial status?
What is their relationship to money?
What is their relationship to you and money?

It’s not uncommon for things that come up in this exercise to contradict some of the ideas you put forth in the first exercise. And it’s important to note and resolve these as you work through them. Otherwise, you risk sending a lot of mixed messages about money to your kids.

For example, I’ve often heard parents say that they don’t want their children to grow up thinking about or stressed about money, or to choose a college because of what it costs or a job because of what it pays. But, when asked to imagine an ideal image of their kid as an adult, it involves the child’s financial independence, a reasonable level of comfort, and an adult not overly burdened with debt or bills they cannot pay. And for children that are taught not to think about money or concern themselves with how much things cost or how much they will earn, it may be a lot harder for them to achieve the financial independence or comfort you hope they’ll find, because most people who feel financially confident, independent, and comfortable as adults didn’t get there on accident. Something, intentional or not, told them that money was important to be mindful of and pay attention to, and so they did.

Recognizing these potential contradictions and working through the nuances of money messaging is important, because one of the things that makes money so hard to navigate for many of us is what we WANT to believe about it (for example, that it can’t buy happiness), might be directly at odds with the reality of money and how it works in our society (which is that an excess of it may not buy more happiness, but having too little of it can certainly be a major contributor to unhappiness.) Grounding your lessons in a real-world image of how you hope to see your kids navigating their adulthood is an important part of this process. It is, in fact, the end that you have in mind when you’re asking the question, “how do we teach our kids about money?”

Distill down to between one and three big money values or concepts.

Money is a BIG topic. And there are a million lessons that you may want to teach your kids about it. But without some clear connecting threads, the conversations and the lessons will probably just go in one ear and out the other.

Just because you’re teaching your kids a million things about money, if you don’t help them develop a deep underlying connection to a few central ideas, you risk leaving them feeling similarly adrift in their understanding of how money works, and how to navigate it in life. And that leaves them with no way for their curiosity to continue to develop, and certainly no way for them to continue learning on their own after they leave a structured environment.

Money is everywhere, and you won’t have a chance to plan each lesson or opportunity to talk about it with your kids. So, it’s important to have just a few, big, important ideas to connect those smaller lessons to, not just to help their learning be cohesive, but also because when your kids ask you a question on the fly…

Can I have $30 to go out with my friends?
Can I have a new toy?
How come we can’t go to Disneyland?

…these core values will be important to connect back to, to help frame up each conversation and each opportunity in a way that supports the big underlying ideas you hope your kids will learn. These core values will help you structure their lessons and help you make connections spontaneously as opportunities arise. And eventually, when you are no longer there to guide them, these core values will help them think through their own money decisions and begin to solve their own money problems.

It may not be possible for your kids to have a single financial North Star, but a few key ideas to navigate by are crucial.

A great place to start is with the hope you have for your kids in part 2. Start with the end in mind, what are the key overarching values/beliefs that your adult children have about money? Try to distill it down to 1-3 core beliefs.
Then, move back to part 1. Where do the smaller ideas, actions, and beliefs (that you hope to keep or change as you work with your kids) fit within the overarching value systems you are trying to build in your adult children? Are any of them contradictory or undermining and how can you resolve that?

Try to make these broad and values-based, rather than specific.

For example, if you hope your child will grow up to be a wealthy doctor, try to unpack that a little more. What are the aspects of a wealthy doctor’s life that you’re really hoping for your child to have? Ideally, you’re not using this exercise to create specific avatars of exactly who you want your kids to be when they grow up, but rather trying to get more at values and overarching beliefs about money that you want them to have.

An overarching belief might be:

Money is a tool that can be used to care for ourselves, our families, and our communities, and it’s our responsibility to engage with it intentionally and responsibly.

Then, underneath that big value might be a whole series of smaller conceptual ideas we hope to teach:

Just like with any tool, there are nuances in how we use it and what we’re trying to accomplish with it, but also some basic ideas we can always return to, like not using or spending more than we have, or not taking it unfairly from other people.
It’s advised to think about how much money we need or are willing to spend before making big and small decisions (because, after all, we wouldn’t start a construction project without first knowing what tools we need).
Our choices related to how we care for (or choose not to care for) our money impact not only ourselves but can also impact other people.
Just like with all tools, it’s important to learn how to use money safely, and eventually, skillfully.
We will make mistakes, and we should try to learn from them, but there are also big mistakes we might want to be extra careful about not making with money. (If we follow the tool analogy a bit farther on this one, the difference between a cut that requires you to buy more material and a cut that takes off a finger is an important distinction to make.)

And under each of these sub points, that’s where our lessons fit, each tying back to just this key, overarching idea.

Having the structure above will help you start noticing scenarios and times in your day with your kids that you can bring up a quick lesson that ties back to these bigger beliefs. It will help you answer their casual, daily money questions with more certainty.

The example above is not in any way designed to instruct your ideas about what you “should” want your kids to learn about money, but rather to give you a sense of how to distill what seems like a fragmented series of ideas you might have and things you hope your kids might learn, into a smaller number of central ideas that can guide how you form all of the opportunities you have to teach your kids.

Without these guiding principles that you decide on, there’s no real point in talking about the types of lessons we might use to teach our kids about money. So really take some time with this first exercise. For now, focus on the overall general money-persona you want to develop in your adult children.

And next time, we’ll throw these ideas out of the vacuum and talk about the fact that kids are not, in fact, blank vessels ready to all learn the exact same lesson from you, no matter how well you teach it.