Everyday stressors—such as traffic delays, work issues, and unexpected events—can be a challenge to day-to-day living. One stressor that seems never to go away is financial matters. Whether it’s sticking to a budget, saving for retirement or a large purchase, reducing debt, or paying for a family vacation (and the list goes on), money is a common source of tension within a relationship. Then add kids. Raising children is a joy, and at the same time, it is taxing physically, emotionally, mentally, and spiritually. Providing for them, fulfilling their needs, and teaching them about money can make the stress seem like something akin to navigating the rapids of a fast-flowing river.
Modeling healthy financial habits
So, how can parents navigate life’s financial stressors and model, teach, and create healthy financial habits within their home for their children? I believe it all begins with understanding your own money story. The phrase “money story” refers to the money beliefs and behaviors that have influenced you, as well as identifying the people and events that have created your money habits. Our money habits and emotions about money are what our children observe and will have the greatest influence on what they believe about money, how they handle it, and how they are influenced by it. If we want our children to have a healthy relationship with money, we would do well to pause, reflect, and consider our money story and then ask questions like:
- What aspects of my money story are healthy?
- What in my money story do I not want to be repeated in the lives of my children?
- Is there someone in my life who can help write my future money story and help me make better financial choices?
- Where do I need financial help?
Parenting and finances
In the mid-1950s, Philosopher Charles Malik identified seven factors that shaped the lives of people. In descending order of influence, they were family, church, state, education, business, media, and entertainment. If Dr. Malik conducted the survey today, I suspect the order would be very different, with media and entertainment rising to the top and church and family dropping toward the bottom.
As we consider how to teach our children about money, it can be stated that if you don’t teach your kids about money, someone or something else will.
As I reflect on my money story, my marriage money story, and raising three children, my wife and I had to have conversations around these four money-parenting themes.
Needs versus Wants. My wife and I desired to teach and model the difference between a need and a want. It was common for one of us to say to our children, “We can’t buy everything we want,” or when in a grocery store check-out line to say no to the urgent and loud desire coming from one of our children for that candy bar or pack of bubble gum. We desired to model contentment regardless of the wants that we had or that our children were clamoring for.
Now versus Later. There is a difference between instant gratification and delayed gratification. Using the phrase, “If you buy that now, then you won’t have money for_______,” can teach a child that instant gratification can have long-term consequences for achieving bigger goals. Part of the now versus later modeling involves helping your child identify the larger story or goal that they want to participate in rather than giving in to or settling for the immediate. Another phrase that helps teach now versus later money habits is, “How about if we wait to buy that? And when we come back next time, if you still want it, then you can buy it.”
Earned versus Entitled. Another decision you will have to make is how your child will access money. Will you have your child earn money for work they do around the home? Will you have them “earn a commission,” as Dave Ramsey, personal finance expert and host of The Ramsey Show, calls being paid for chores around the home. Will you have your child earn money from a job outside the house? Or instead, will you give them money for items and experiences?
Enough versus More. In your home, how do you overcome the “lack” mindset or the “not enough” mindset and instead cultivate gratitude for all that you do have? How could you bring perspective to your child about all that you have at a time when they (and even you) have a desire for more? As a person of faith, I suggest using phrases like, “Let’s thank God for ______,” “Let’s ask God to ______,” or “Let’s trust God for _____” to help change one’s perspective.
Other ideas or habits that might be helpful to consider include:
- Have your child pay for things with cash at the store.
- Give your child a $2 bill and explain that many in the world live on less than $2 a day.
- Give your child a dime to put in the offering box at church.
- Let your child feel the consequences of poor money decisions. You would rather that they learn money lessons earlier in life, when the consequences are relatively small, compared to when they are in adulthood.
- Participate in fundraisers where your child learns that achieving a financial goal requires a lot of hard work.
What about grandparenting and finances?
There are many potential roles that grandparents can play in the financial lives of their grandchildren. A grandparent should consider what their financial role could be in light of the money story that their grandchild’s parents want to “write” in their child. Here are a few tactics for grandparents to consider using:
Incentivize their grandchild’s savings habits. “If you save a portion of that money I gave you, Grandpa and I will match it.” Or “When you have $50 saved, we will treat you to ice cream.”
Nurture giving. Some grandparents invite their grandchild into their charitable giving, whether it be through a Donor-Advised Fund or holiday giving. Inviting a grandchild to consider what “breaks their heart” and then finding a charity that addresses that brokenness can be the first steps in teaching a child to give.
Encourage investing for their future. If a child has earned income, whether through a job, doing chores around the house, or in the neighborhood, the money earned from that work can be used to open a Roth IRA. All Roth IRA earnings are tax-free upon withdrawal. Many grandparents will match what their grandchild contributes to the account.
In the short term, parenting or grandparenting financially healthy kids can feel like whitewater rafting; there are lots of bumps, lots of emotions, and maybe even some fear. But if you hold on, keep moving forward, keep anticipating what is upcoming, making adjustments and preparations along the way, your children will see how you live, how you give, how you spend, and they will become wise when it comes to their finances.