How to raise kids that are money-savvy and happy
Written by Sonia Gibson
Rarely, does money solve a money problem. Money problems are solved by improving financial literacy. You need to have the skill to assess your financial situation and find the source of the problem. More often than not, it’s not a shortage of income (although it’s incredibly common to believe that more money will ease the financial stress), more commonly, it’s a cash management problem. As parents, we are committed to our children’s education, believing that will lead to a good job and financial security. Without understanding how to manage cash wisely, decent salaries will fail to sustain a family.
The root of the problem
One of the primary issues that everyday people face is a limiting belief system. It is common to hear people say phrases like “I am no good with money”, or “managing money is not my thing”. We’re also seeing pop culture make light of over-spenders and retail therapy, which can normalise a lack of financial literacy.
When there’s a fundamental lack of information, it’s only natural that there will be a lack of knowledge. We are not seeing a lack of understanding about money, we are seeing a lack of insight into money. Financial literacy is not taught in schools and children who fail to excel in maths often assume that they’re not skilled at working with numbers. With poor grades, the message that instils the self-limiting belief is continued at home as the parents affirm to the children that they’re not good at maths either.
The effects of large-scale financial illiteracy on society
When this happens on a large scale and for generation after generation, it becomes a societal problem and we see the effects of it without understanding it correctly. As a result, we see imbalances of power in households. One member of the family handles the finances while the other spouse has no idea what the bank account looks like. This makes it difficult for families to enjoy balanced accountability and power. It’s often the woman that leaves the finances to the man, making her powerless should she ever decide to walk away.
In another scenario, both the man and the woman are uninformed on how to handle money. Debt is introduced and introduces yet another variable, making it increasingly difficult to ascertain what “living within your means” actually looks like.
For many that are good at maths in a classroom, implementing that theoretical knowledge that is only taught on paper, into a real-world setting, can be difficult. Maths and finance are not taught in a practical sense at school, learning how to handle your taxes and manage your income and expenses is a real-world skill that children need.
The alternative, the reality that many young adults face as they enter the working world, leaves them living from paycheque to paycheque.
What can we do differently?
- Parents can start teaching financial literacy at home by giving children “pocket money” and expecting them to manage a certain number of their own expenses, teaching them to budget.
- Children can be encouraged to “earn” their pocket money. By assigning value to certain chores around the house, children can understand the value of the money they hold in their hands.
- Teach children how to budget. Involve them in managing the family shopping budget, understanding food prices and the value of each item you purchase.
- Stop the negative talk around children regarding maths and finances. Use words of encouragement instead.
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