Why Should We Teach Our Kids About Money?
Welcome back!
I read a great blog post yesterday from Dave Ramsay, which started:
Some people say, “Timmy’s so young. I want him to enjoy being happy and innocent. Money is a worry for grown-ups, not kids.”
I say, “We’re raising a whole generation with ‘sucker’ stamped on their foreheads because we’re not teaching them.”
Your job as a parent is not just to keep your child happy. You’re raising a future grown-up who needs to be able to deal with grown-up matters. If you teach little Timmy how to handle money responsibly, then grown-up Timmy will be better equipped for a richer life.
I think Dave makes a very good point here – we are all questing for happiness, and we all operate on the assumption that is life is easy, we will be happy. Therefore, we try to make life easier for our kids, in the expectation that they will then be happier.
The truth about happiness, however, is that the ease or difficulty of life is not the issue. The issue is how we deal with life. Competence breeds happiness. The ability to handle one’s responsibilities breeds happiness. A sense of self-reliance and self-direction breeds happiness.
“Cotton wool kids”, who are sheltered from “harsh reality”, never have the opportunity to learn how to deal with life and manage responsibilities in a gradual manner, with parental support. They remain infantilised until the day that parental safety blanket is ripped away – by death, divorce, or the need to move away from home – and then they are suddenly, shockingly, exposed to situations for which they are woefully unprepared.
Needless to say, there are not happy at that point.
However, even during the “cocoon” phase, studies show that kids who have everything done for them suffer from anxiety and depression at a greater rate – and as the post-war generations have progressively shielded their kids from more and more of life’s harsh realities, the rates of depression in the population have soared.
Human beings instinctively know that life takes effort. We enjoy the moments of rest and freedom, but we enjoy them because of the contrast with “real life”. In the absence of major challenges from the outside, we hunt for “problems” amongst the minor ups and downs of daily life.
Kids as young as eight are worrying that they will have to support their parents financially when they grow up. These are comfortably middle-class American kids I am talking about. Suze Orman wrote an article for the Readers Digest in which she recounted the story of visiting a third grade class and asking them what their financial worries were. One child piped up with “I am worried that Mum and Dad will run out of money when they are too old to work and I will have to take care of them.”
Expecting this to be a rare thought, perhaps due to a particular family situation, Suze said “Does anyone else have that worry?” – and about half the class raised their hands.
Data shows that the greatest risk factor for bankruptcy is being middle-class and having children. These are some of the most pampered and protected children on the planet. These are the kids whose parents want them to “just be kids”.
These are the kids carrying huge financial worries – and unable ever to talk to anyone about it.
“Run along and play, don’t you worry about that” won’t cut it.
We need to prepare kids to deal with money from the day they first want to spend it. We need to talk openly with kids about financial issues – at an age-appropriate level. Most importantly, we need to recognise that they can and do think very responsible thoughts about money issues – but without the perspective or knowledge required to feel confident about that responsibility.
We don’t shield kids from problems when we tell ourselves “money is a worry for grown-ups, not kids” – we just isolate them from the solutions.
