Teaching Children Financial Intelligence… the Right Way
“You just threw away $150 of my hard-earned money,” says a parent to the 5-year-old who had accidentally dropped an iPad and cracked the screen.
“Money does not grow on trees,” says a working mom to the 10-year-old who had asked if he could get a phone for his birthday.
“I’m sick of you losing your sweatshirts,” says a parent to her 14-year-old. “You’re going to have to pay for them out of your allowance from now on.”
“What! You dropped two classes this semester? That’s it,” scolded a father of a college freshman. “You’re paying for your own classes moving forward. You need to apply for a loan and get a job.”
Why are we so quick to hang a dollar sign on our children’s mishaps? Why are we in such a hurry to tell them how hard it is to earn money? Why do we assume that by connecting their mistakes to money wasted or lost, we are able to teach them a lesson on financial intelligence?
Look at the examples above. You could easily replace the parents’ words with, “You don’t understand the value of money.”
I shudder when I hear parents equate children’s mistakes with not understanding the value of money, perhaps because that carries a personal meaning. Unintentionally, when my loving and nurturing parents said those words to me, they programmed my reactions. As I got older, every time I lost something or broke something, my brain would instantly jump to, “Oh no! I wonder how much that cost?” Or “Ugh, I wasted money again.” I wondered how I could pay them back for their “hard-earned money.”
Planting guilt and fear around the concept of money was hardly my parents’ intention. I know they were trying to teach me to be financially intelligent by putting dollar signs on lost or broken things. But as a child—one who has no earning power and hence no concept of money—my brain was misled by their words. What I developed was a negative impression about money and my relationship with money—one attached to fear.
If every time our children make a mistake, we equate that with the number of dollars lost, we are damaging their relationship with money. By making them feel they have no sense of the value of money, we are planting fear in their minds and pushing them away from financial intelligence. We are scaring them, not educating them.
Think about it, If we keep telling our kids how hard it to ride a bike, they will be afraid to get on and less likely to want to ride one. We actually rob them of the joy of that experience. Similarly, if we use fear-based language around money issues, children will be less confident about money management.
So here’s how we can guide our children toward financial intelligence and build their confidence along the way. Keep in mind that:
Financial losses are golden teaching moments. When the iPad has fallen and cracked or the sweatshirt is lost again, take a deep breath or drink a few sips on water to buy some cooling-down time. We all know that we cannot learn without making mistakes, and dealing with wasting money or misusing it is like any other life lesson. Step into the teaching moment with patience and…
Check the child’s intention. Is this an unintentional accident, an oversight, or an impulsive reaction? Kids (yes, even young adults) often don’t think things through. Once you’ve determined the child’s intention…
Practice Emotional intelligence. Explore and address the feelings behind the behavior. Emotional intelligence propels a child’s academic and life success, and that includes financial success. A quick Dealing with the Feeling can balance emotions and set the pathway for financial intelligence. Now you’re ready to…
Respond and not react. A reaction is emotional and impulsive, while a response is thought out; it comes from the intellect. Keep in mind that if a reaction from the child is answered by a reaction from the parent, emotions are in the lead and resolution far behind. A child’s reaction should be met with a parent’s response in order to communicate effectively and for the lesson to be learned. Now you can…
Resolve with focus. Open up discussions by pointing to the issue (the object) and not the child (the subject). If you child has accidentally dropped the iPad, focus on the larger lesson of “accidents happen” and apologies make us all feel better. And if he or she has thrown the iPad impulsively, explore how it would make them feel if their iPad had been thrown and broken. And if the sweatshirt keeps getting lost, perhaps your son or daughter can concentrate on put it in their backpack as they take it off. If they want a phone, meet them halfway by suggesting that if they can save up half the money with chores around the house, you’d kick in the other half. This will inspire them to keep track of money as it adds up—a financially intelligent move! And if your child has dropped classes, ask why, kindly. Perhaps he or she is having difficulty coping at school or is distracted by social concerns. Reasoning ushers in empathy and compassion.
Most importantly, release any expectations attached to money. In the real world, when we have jobs or hire out services, there are always expectations attached, and subconsciously, we take that mind-set into parenting. But children are still learning about financial intelligence, which is first and foremost about being comfortable with and free of fear about money.
Money does not buy us power or control over children. It is our responsibility to take care of them, and part of that responsibility means spending money on them. We are not doing them a favor. They don’t owe us because we spend money on them. We should do this out of pleasure, instead of burdening our children.
Teach children that money is an energy—just like love. The more we nurture and understand it, the more we will have. The more we give it, the more it will multiply. Once we instill those values around money, we give our kids the power to earn it, enjoy it, and share it. That is the shortest and most empowering road to financial intelligence—one rooted in love, freedom, and learning.
In Joy,
Roma
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