How to Teach Your Child the Value of Money This Father's DaySubmitted by Reby Advisors | Certified Financial Planners | Danbury, CT on June 15th, 2018
Father’s Day is coming up this weekend, which means kids are working together to draft up cards, coordinate events, and whip up brunches and cookouts with dads’ favorite meals. As a day for father appreciation, it’s also a time for the dads of the world to reflect on the family they’ve created and how they plan to continue supporting that family long after they are gone.
Dads (and moms) often list paying for a child's education or leaving an inheritance as their own personal financial goals. These are wonderful gifts for any child and may help them pursue their dreams and happiness.
However, the money lessons children learn from their parents – rather than the money given to them or the expenses that have been paid for them – often have greater impact on the child's success, happiness and fulfillment later in life.
Teaching a child the value of money may be the key to raising a successful adult.
Strategies to Teach Kids About Money
Unfortunately, according to a report published by Wells Fargo, "When 2,459 students aged 15-18 participated in a test of financial literacy standards last year, more than half scored at or below 69.9%, the equivalent of a D+."
Fortunately, the same report indicates that children are eager to learn about money and offers strategies that parents (and grandparents) can implement to teach kids successful habits:
- For starters, if you haven’t already, use this Father’s Day as a reminder to mentor your kids financially, taking them to the bank to open their own savings accounts.
- Teach them about budgeting, and how they can start saving today for a better future tomorrow.
- Break down the difference between needs and wants, and how working hard can make their wants more attainable.
- Work with them to set attainable goals, as well as understanding that timelines can be slow but worth the wait.
Despite your own success, if your children do not learn how to work, budget, and understand the value of money, they probably won’t be prepared to find their own success. Furthermore, they may not be responsible with any inheritance you leave behind.
Bob Reby discusses the importance of passing along wealth wisdom to children in Wealth Redefined. Click here to read the excerpt (starts 3/4 of the way down the page).
What Kids Learn About Money from Your Example
Research by Eileen and Jon Gallo, authors of The Financially Intelligent Parent: 8 Steps to Raising Successful, Generous, Responsible Children, shows that children learn values and priorities by observing how their parents spend money. As you know, kids are constantly paying attention to your actions and choices.
Your volunteer activities, donations to charity, and even the thought process and consideration that goes into declining requests for charity all influence your children. If you want your children to understand they have the power to change the world for the better, show them the example you'd like to see in them one day. Take it a step further and volunteer as a family.
Essential money values like self-motivation and work ethic are also learned.
To develop self-motivation in children, the Gallos recommend using chores as a means of helping children take pride in contributing to the household, rather than doing it for pay.
When it comes to schoolwork, the Gallos suggest rewarding and praising effort and perseverance rather than grades.
Children who always do their best (even when they aren't the best) develop a work ethic that will serve them well in life regardless of their natural abilities. Conversely, the smartest kids who get straight A's with little effort may not develop the work ethic required to realize their potential later in life.
Overall, leaving a financial legacy may mean very little to children who haven't been taught the value of a virtuous life, one filled with gratitude, hard work, and appreciation. Although taking your kids to the bank and teaching them about financial responsibility is a good start, they are ultimately going to pay attention to your actions and decisions.
Start planning this Father’s Day for the father you want to be remembered as when it’s all said and done. Leaving a legacy that makes your kids proud to have called you dad is going to lay the foundation of a long and fruitful life.