There’s something contradictory about the role of money in our lives. It would be nice to have more of it, but not too much of it. We need just enough of it not to worry about it. As a parent who wishes to instill good values in his children, it is tempting to rely on comforting cliches. To say “money isn’t everything,” or that it “can’t buy happiness.” But getting your kids to think maturely about money takes more than upbeat platitudes.
The fact is that money isn’t everything, but it is important for quality of life. Every parent wants their children to have opportunities within a stable environment that fosters happiness, safety, and comfort. At the same time parents often fear the spoil factor whereby their kids become brats who don’t have to (or want to) work hard in life to make a positive contribution to society. I can’t speak for everyone, but I want my children to have a healthy relationship with money.
So how does anyone, including me, create that balance in their children? The best way is to show them a good role model in yourself. How you treat money will have a big influence on how they do the same. And there’s a bigger, more important question: how do you get your kids to start thinking long-term when they, and the whole world, are doing the exact opposite?
Examples, Examples, Examples
It can be very easy to forget simply including your kids in your basic responsibilities. That doesn’t mean seeking their advice on retirement planning or asking for stock tips, of course. It does mean some very basic things: How to write checks and balance a check book. How to keep an eye on your bank accounts. How to pay bills. How to set spending priorities, such as between what you have to purchase and what you want to purchase, or how to save up for that special thing you wanted.
Some of these things may seem so basic that they’re almost intuitive, but remember, no one is born knowing how to write a check or pay bills, never mind take out a student loan or refinance a mortgage. Even most adults find these things utterly stupefying, and there’s nothing wrong with showing your children that sometimes you’re just as confused as they are.
Demystify the financial process. Help your kids get comfortable (but not cavalier) with the idea of money. Show them how basic transactions, such as store and online purchases, actually work. But also show them why you might not want to buy something, due to cost or practicality. Responsible budgeting is about choices, so they should see you making some good ones. Demonstrate to them when things like credit and loans are useful, such as for education or buying a home. But also make clear when credit is a bad idea, like impulse purchases.
Youth is Short-Term, But Life Is Long-Term
The world feels very strange right now. Everything, the economy, the news, the internet, the speed of change, is moving very, very fast. Even with so many of us stuck at home, it seems like everything is accelerating. Never before have so many changes to the economy, from stock market pushes to the new world of credit to cryptocurrencies to everything else, happened so fast. But It may be useful to use the experience of the pandemic, and everything else, to push good financial planning.
As chaotic as things may seem, the course of a lifetime of financial planning actually looks pretty calm. From a distance, at least. And that’s the best financial lesson you can possibly instill in the next generation, because the advice remains the same: Put away what you can afford each month. Plan your investments to pay off far in the future. Have faith in the market over the long haul, and don’t be rattled by its daily ups and downs. Don’t panic, even when you really want to.
If there is anything that can convince kids to think long-term, it is perhaps the fact that long-term planning is the only thing that has ever consistently worked, one of the few things you can count on. No one can just snap their fingers and create wealth. There’s a reason we view the term “get rich quick scheme” skeptically, if not dismissively.
As devastating as the pandemic has been, we are now, ever so slowly, beginning to crawl our way out of it. Just like we crawled out of the Great Recession, the Dot Com Bust, and every other major crisis before it. It is tempting to use Covid to justify cynicism and delve into short-term thinking, to use it as proof of how unstable the world is, or how quickly the rug can come out from under you. But as insurmountable as this time one year ago may have felt, time went on. Days and months passed. And while things remain rocky, things did get better. Tomorrow, and the future, will always come. Maybe that’s the hardest lesson to instill in kids; you’ll be around this world for quite a while. You should plan for it.