The Key to Raising Money Wise Kids

June 24th, 2021

Money is frequently the unseen elephant in the room. There are numerous reasons to avoid discussing it, ranging from children's eyes glazing over to parents' fear of saying something incorrect. As the children progress through K-12 and into college, the effect is frequently a deafening stillness. Soon enough, they'll be young adults confronted with financial decisions they're ill-equipped to handle.

So, how do you communicate to youngsters about money as they become older so they can make good decisions and build financial confidence? I've discovered that the ideal place to start often has nothing to do with money, budgeting, saving, or investing. Instead, the primary concerns are the children's interests/passions and personalities. These are the underlying motivations that drive our lifelong connection with money and how we use it to live a fulfilling life.

However, interests/passions and what we call "money personality" are not directly accessible. "What are you truly into?" ask a child or young adult. "What do you enjoy doing?" You're likely to get a blank stare, a shrug, or some mumbling in response. This style of questioning has the sense of an interrogation. As a result, I help with clients who are parents to find new ways to explore their hobbies and passions.

Getting at Motivation

On occasion, I will place a deck of picture cards on the table. There are images of a variety of items and people doing a variety of things. Then I ask both the parent and the youngster to choose three cards that they are particularly drawn to. I also select three cards. Then we discuss why we chose the cards we did. What is it about that specific image that makes it unique?

Everyone feels more at ease when an objective outsider, such as myself, initiates and participates in this process. This frequently leads to a casual and enjoyable talk with youngsters about their interests, what is important to them, and sometimes even future plans. Parents frequently learn a lot more about what their children are drawn to and what inspires them. And I do as well. People sometimes discuss about how the many photos are related, and those connections provide amazing insights.

Defining Money Personality

Certain basic personal traits that influence money relationships can be identified as early as age 5 or 6. One child, for example, will save all of the money from a lemonade business, whilst the other will spend it right away. Money personalities can be highly varied within the same family and can cause problems if not recognized and discussed.

I occasionally begin with a quick quiz to determine someone's basic money personality. I do this first with parents so they can see what personality their children have. It's usually quite evident. What is less visible are the positive and negative components of each personality, which I explore with clients in the context of their family dynamics.

The antidote to undesirable qualities is, you guessed it, hobbies and passions. If a daughter is a soccer fan and a spender, she is more likely to save money to buy tickets to a soccer game or to donate to a soccer-related foundation. Interests shift over time, which is ok. It is not so much about having specific hobbies as it is about having and developing positive interests. These can then be used to counteract negative money personality traits and drive young adults to work hard at something they enjoy.

Another thing that youngsters learn is through observation. If I witness a parent's behavior repeatedly contradicting what they're attempting to communicate to their children, I believe it's my responsibility to point it out. These can be difficult discussions. Our clients, on the other hand, understand that we have their best interests at heart. They want us to provide objective, timely advice based on our decades of experience working with different generations within families. Then they will be able to make their own decision.

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