Children and money: Developing a healthy relationship with money

As parents, we all want our children to have a healthy relationship with money so that they can enter adulthood with a positive view and a clear understanding of money and how it can be effectively used to achieve their goals. While we know that money won’t necessarily make them happy, through our words and actions we can provide them with a better chance of developing a positive connection with money and a deeper understanding of the role it can serve in their adult lives.

Talk openly about money

It is important to talk openly, albeit age appropriately, with your children about money and finances to demonstrate that financial matters need not be shrouded in secrecy or mystery. Overtly secret discussions or hushed debates about money can lead your children to think that financial matters are not for open discussion and should be kept underground. The need for secrecy or concealment can lead to feelings of guilt, shame and fear when it comes to money matters, causing unnecessary money-related anxiety later on in life. Be open with your children about the family finances using their age as a guideline for what level of information is appropriate for them to absorb and process.

Allow them to make their own decisions

If you’re paying your children an allowance or pocket money, avoid trying to micro-manage the way in which they choose to spend their money. Rather, allow them to make mistakes with their money so that they learn early on what it feels like to have regrets about poor decision-making. Learning to live with the consequences of one’s decisions is an important life lesson. In the process, you might also help them brainstorm ways to rectify the decision or put steps in place to ensure the mistake is not repeated.

Demonstrate honesty

Be sure to always demonstrate honesty when it comes to money so that your children know that it is never okay to cheat, conceal or tell untruths about money. If you’ve mistakenly short-paid for an item, demonstrate to your child that the right thing to do is go back to the shop and pay the difference. Avoid haggling with informal traders to try and get the cheapest deal. Rather, impress upon your children the importance of supporting small business and paying fair value. Don’t conceal purchases from your spouse or partner and ask your child to participate in the cover up. You are your child’s role model, and she will take her cues from you in terms of the financial behaviour you consider permissible and/or acceptable.

Let them see you using your money for good

It is important for your children to see you using your money and/or resources for good. Whether in the form of charitable giving, pro bono work or providing services to someone in need free of charge, your giving will help your children appreciate that money can be put to good use in uplifting communities and helping those less fortunate than ourselves. More importantly, if your child can witness the joy you receive from giving to others, she may become motivated to participate or start pursuing her own charitable interests.

Demonstrate a work-life balance

Demonstrating a healthy work-life balance will help your children develop a healthy sense that a career can be rewarding and pleasurable, and that it is possible to make money doing something that you enjoy.

Show them that a budget is not punishment

Speak about the household budget in a positive manner so that your children develop a healthy respect for budgeting. Instead of using the budget as evidence of all the things you cannot afford, demonstrate how sticking to the budget ensures that there is fun money at the end of the month that the family can enjoy. This will help your children develop a positive association between the budget and the ability to afford good experiences and fun times with loved ones.

Don’t compare your finances to others

Avoid judging other people on the amount of money that their earn or by their accumulated wealth as this may lead your children to believe there is a link between money and self-esteem. There is no connection between a person’s integrity or character and their net worth, so avoid misleading your children into believing there is. Similarly, avoid judging people for being poor. Rather, demonstrate through your actions that a person’s values and character are what makes them a good human being.

Don’t bicker or fight about money

Arguing with your partner or spouse about money can lead your children to associate money with tension and discord. While money can be an enormous source of tension between couples – and very often is – avoid exposing your children to arguments and acrimony. Ideally, demonstrate to your children that, while it is only natural for the two of you to have different views about money, you can find a way to make compromises and create solutions that work for both of you.

Don’t make them feel guilty for buying something

Encourage your children to make smart money decisions by encouraging them to do their market research, compare prices, check quality, and to assess whether their desired purchase is a ‘want’ or a ‘need’. Avoid making them feeling guilty for making a purchase, especially if they’ve done their homework and can justify their spend as this can result in them associating spending with shame.

Allow them to experience work in exchange for money

Getting children to appreciate the value of money is an age-old challenge. That said, one of the surest ways of helping anyone appreciate its value is to allow them to work or do chores in exchange for money. Be sure to set an appropriate value to each chore so that they don’t attach unrealistic worth to each job or chore. As they get older, give them the opportunity to negotiate their wages and motivate for increases as these are useful skills for later in life.

Don’t kill their entrepreneurial dreams

Do everything you can to encourage their entrepreneurial ambitions by allowing them to share their ideas without fear of ridicule. Avoid responses such as ‘you’ll never make money doing that’, ‘you can’t make a career out of that’, or ‘that’s not a proper job’. The pace at which global disruption is taking place means that our children will have career options available to them that do not yet exist. Encourage their dreams, and help them to research their ideas and learn more about how to develop the required skills set.

Don’t let them believe that finding a rich partner is an acceptable path to financial freedom

Raising your children to believe that the only way to wealth is to find a rich partner is a recipe for disaster. Not only will this influence your child’s decisions when choosing a life partner, but it also sends a message that you do not believe she can be successful in her own right which, in turn, can impact on her self-esteem and self-confidence. A wonderful meme shared on LinkedIn recently drove home this message where a recent female medical graduate held a placard which read, ‘I am the doctor my mother told me to marry’.

Watch your language

Be aware of the way in which you talk about money. Negative words and phrases can cause your child to develop a scarcity mentality which can severely limit their view of money and finance. Those with a scarcity mentality believe that money is finite, debt is inevitable, and they will never have enough resources to reach their goals. Phrases such as ‘I’m broke’, ‘we can’t afford that’, ‘we can’t make ends meet’, ‘you kids are costing me a fortune’, and ‘money doesn’t grow on trees’ are examples of a scarcity mindset. Instead, consider using phrases such as ‘I need to generate additional income’, ‘we can make ends meet if we budget carefully’, and ‘let’s work out how we can afford that’ which instead speaks to abundance and possibility.

Honour your financial goals and commitments

Impress on your children the importance of honouring your financial commitments, paying bills on time, repaying loans, and paying your own way. Don’t be afraid to share your financial goals with your children and keeping them updated on your progress. There is no better way to teach children the value of goal-setting that to show them practically how it works. Celebrate your success with your children and allow them to share in the excitement.

Don’t be scared to talk about your past money mistakes

We’ve all made financial mistakes, and it’s important that we share these mistakes with our children. Not only will it help them avoid making the same mistakes but it will help them realise that we are all fallible and capable of making poor decisions. It’s how we rectify our decisions that really matters and these fix-ups can be valuable lessons.

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