Let’s get one thing clear: nobody teaches their children about personal finances. No one. I’m willing to bet that if you say you do, you really do not. “Teaching personal finances” implies that parents sit down and explain how the entire household budget works, and no one ever does that. Ever. And why should they? The children are kids, for heaven’s sakes! It’s your job as an adult to provide for them, not lobby for their support on financial matters. On the one hand, people can’t explain their household finances to themselves – otherwise, why would so many households be struggling under crippling consumer debt? On the other hand, your decisions about where your money goes – for better or worse – are none of your children’s business. You’ve got to teach yourself what you’re up to – you have to understand your own behaviour – and heaven help your kids if you’re not up to the job.
For children, learning how to successfully manage personal finances is more of an apprenticeship. The question is this: do you and your spouse – does your extended family – have the capability to show your children the kinds of things they’ll need to know to navigate the world of finance? Is the rent paid? Is there good food on the table three times a day? Do they have a couple of pairs of proper fitting shoes? And please forget about putting “managing debt” and “creating wealth” in the same sentence. For the average family, wealth is not “created”; it’s saved up, dollar by dollar, over years of socking a little extra away. “A little extra” is what you get when you do not spend money. If you manage to control your spending, and control your debts, your wealth is to be found in what you DON’T pay for: huge interest payments on credit card debts, for instance.
So: the apprenticeship. If you are saying “yes” to everything that you see, then your children will think the way you do. When the bills come in and the stress mounts (and money-related stress causes an awful lot of marriages to dissolve), your children will not understand what’s going on. Some may internalize the blame, too (after all, you were just buying things “for the children” weren’t you?)
Start by saying “no” to things. When you’re in the store, ask yourself, “Do I need that?” Most times, the answer is no. Shop with a list. Buy what’s on the list. Stop buying coffee and lunches – buy a thermos and an insulated lunch bag and bring them from home. Pay yourself in cash each week – and spend only the cash you have allotted. Explain that to your children. Explain how you decide what is worth having and what is not worth having (debts and stress – and yes, increasingly – eviction from your home). You don’t need to live like a martyr, just stop spending without thinking. Your children are learning from you everyday. If you can learn to be happy with fewer material things, so can they. Being reasonable about money: it’s a gift of a lifetime.