Most parents struggle to guide their children toward becoming financially independent adults. Even if you don’t consciously realize it, you are laying the groundwork for your children’s financial education every day, whether or not you talk to them about money.
If your children are typical, they will be eager to acquire material goods. If you’re like other parents, you probably wish you could provide such amenities for your children. When in America, do as the Americans do.
Here’s the catch, though. Giving your child everything he asks for won’t help him become independent, will do nothing to foster intrinsic motivation, and will not affect his work ethic. If you’re always there to satisfy your children’s every whim, they won’t grow up confident they can achieve anything they set their minds to.
On the other hand, forcing a child to be too responsible too soon by denying him or her everything they want or even making them or earning some of the things they or need is problematic in and of itself.
A child in this situation is often deprived of many of the joys of childhood as they are pushed into adulthood much sooner than is healthy. While maturity and responsibility are admirable traits, there is value in allowing children to be kids. After all, most grownups would gladly trade a few days of struggle at the office for a few days of frogging in the woods, shopping with pals, or playing the newest video game on their neighbor’s TV.
This doesn’t necessarily include the child, who, at seven years old, decides to start a business and makes $1000 a month by the time he or she is ten! This child is motivated from within by a force that cannot be seen and should be supported in their efforts. For children who aren’t intrinsically motivated early in life, forcing them into too much responsibility often adds to the other stresses of growing up and can cause very negative ramifications in terms of a child’s behavior and choices in life while they are young.
The balance between these two, combined to give your children a solid financial education, helps create an adult with a sound sense of financial responsibility. The question is…how DO you lay down that solid financial education in those kids of yours in the way best possible for you and the child?
Before we look at how to teach your children about money, we must examine how they learn in the first place. This is because how they learn anything is how they know everything, so it only makes sense to teach them about money using their learning style.
Have you ever noticed that you must ‘see’ a map to understand the directions someone is giving you? Or do you have to see a picture to know how something goes together or how one thing is related? Do you have to be in the front during class to see what the teacher is drawing on the board? Do you use words like see, look, notice, and watch? Your primary learning style is what is referred to as Visual.
On the other hand, do you have to close your eyes to ‘hear’ what is being said because the visual interferes with your ability to take in and process new information? Do you often sit in the middle of the back at a seminar because you only need to listen to get the data? Do you use words like listen and hear? Your primary learning style is called Auditory.
And finally, do you have to ‘do’ a thing to learn it, whether it’s a physical skill, a mental task, or an emotional lesson? Do you often stop and check in with your body to see how something feels before you decide whether or not you have learned it or believe it in the first place? Do you use words like feel, gut, body, and sense? Then your primary learning style is Kinesthetic; you learn best through movement and emotion related to the subject matter.
Most people learn through a combination of two learning styles, and some know through all three, but most have one primary kind that they rely on more than the other two. One important note, however, to pay heed to is that less than 20% of our population are primarily auditory learners. The problem is that most of our schools use largely acoustic forms of instruction.
Let’s apply these three learning styles to teaching your children how money works. If there are three ways for them to learn, they are undoubtedly learning about money from you in three ways.
This means they are watching what you do with money, listening to what you say about money, and experiencing the situations you are experiencing with money in their bodies.
It is not a new idea that human beings learn best by example. Albert Einstein once said, “Setting an example is not the main means of influencing another; it is the only means.” He was right on the money, pun intended. Before you can teach your child anything about money, you must examine the example that you, as the parent or guardian, are setting for him or her.
This means that before you set any allowance in place, start savings and checking accounts for your child, encourage them to create a little business or learn how to trade the latest this and that with friends to understand the value of different things, you must examine your own financial life to see what they are learning directly from you.
This is the most critical and often painful part of teaching your child about money. Allowances are lovely, and teaching kids about money is one of the best presents you can give them, but if your finances are in disarray, they won’t learn the skills they’ll need to build wealth as adults.
What lessons are you teaching your child if you rely on credit cards to get by? Are you always grumbling about how much you hate dealing with money and wish you didn’t have to, or worry that you’ll never be able to afford a house? He or she is experiencing the harsh reality that it is difficult to earn a living. However, things need not be this way.
The best way to ensure your children develop sound financial habits is to model those habits yourself if you haven’t already. Most of us can attest that the ‘do as I say, not as I do’ parenting method has been disproven long ago. Everything we want to teach our kids fits into that category, including how to earn, save, and invest money wisely.
Your choice, then. You should set a good example in these areas before you try to instill them in your child: saving, investing, using credit responsibly, avoiding bad debt, and giving to others. Once you’ve mastered these steps, you can teach your child the one skill they’ll need for a successful transition to adulthood: how to earn, save, and invest money wisely and responsibly.
If you’re ready to take the plunge, it’s time to examine your finances closely. When raising a child, it’s essential to think about the lessons you want them to learn about money and to put them in an environment where they can observe those lessons taught by others. Your children will follow in your footsteps, and remember to be financially responsible by watching how you handle your money. Well done!
Elisabeth Donati owns Creative Wealth Intl., LLC. She developed Creative Wealth for Women, a seminar tailored to the unique financial concerns of women, and Camp Millionaire, a groundbreaking financial education program for children and teenagers. Elisabeth is an expert at imparting vital financial literacy skills to her students in an informative and enjoyable way. Check out for more details.
The Ultimate Allowance is the only book on financial parenting parents will ever need.
You can contact her at 805-957-1024, or you can send an email to firstname.lastname@example.org.