7 Things to Look Out For
We live in an instant gratification society. We want what we want, when we want it. And if we don’t have the means to get it, we’ll come up with the means (usually using credit). Gone are the days of steadfastly saving every penny in order to make that big purchase. That’s so “old school!”
Kids no longer think that money grows on trees. Instead, they believe a little card magically creates money where there was none. When you say that you can’t buy something because you don’t have the money, their typical response is, “Use your card!” The concept that the card is somehow connected to a bank account is beyond grasp.
What can we, as parents, do to counter this immediate gratification mentality and teach our kids financial literacy? Here are 7 things to look out for:
1. Look out for an attitude of entitlement.
While it may seem obvious and even simple, the fact is that few children hear the word “no” anymore. With the exception of the most recent few years, our generation’s claim to fame is its affluence. We have enough money to buy what we need, so we say “Yes!” to every request. Why refuse if you can afford it?
The problem with this way of thinking is that too many yeses turn requests into demands. Eventually, demands become expectations. The expectation that you’ll get whatever you want leads to an attitude of entitlement.
There was one Mom whose kids’ sense of entitlement became so boorish that she started refusing everything. She gave a solid “No,” to every request her kids made and promised them that she would continue to do so until they learned to accept her answer graciously. She didn’t have to buy them a thing for three months!
2. Look out for signs of financial readiness.
There comes a point in every kid’s life where he wants to have his own money. As parents, our natural inclination is often to put off allowance-giving. Let’s face it – it’s a hassle! Keeping track of which kid gets how much, who lost money, who earned extra, and the entire minutia related to doling out allowance is not a chore we look forward to.
Think back to your first lesson on the value of money. Did you have to spend weeks saving your allowance in order to buy a coveted comic book, or work off the window your parents replaced due to your runaway baseball? No matter when you learned it, it was a lesson gleaned by having your own money and being required to manage it.
3. Look out for their emergency fund.
Just last week I paid over $1,000 to have my truck repaired. I paid with a credit card. And now I’ll be paying off that truck repair for a couple months. Take a guess at how badly I wish I’d been wise enough to plan for this type of emergency by saving regularly! You’ve heard the saying, “you can’t teach an old dog new tricks.” That’s what it’s like trying to learn how to save as an adult.
As soon as your kid is earning money, she ought to be setting up an emergency fund. Establishing good financial habits early is the key to having them later on.
4. Look out for “teachable moments.”
As a general rule, we parents want to shelter our kids from negative experiences. We don’t want to overwhelm them with too much information and details that are beyond their understanding. This preservation instinct can easily carry over into finances. However, if money is a mystery throughout your kid’s childhood, it will be a mystery when he heads off on his own.
There are many moments in our day-to-day finances that we can openly share with our kids. For example, when your preschooler is at the supermarket with you, talk about your shopping budget and the prices of items; share how you decide what to buy and what to wait for. When your elementary-aged kids gear up for fall extra-curricular activities, explain the costs of the different sports or lessons and tell them what the budget will allow. Teens can help with tracking and paying the bills, so they develop a sense of what it might cost when they venture out on their own.
5. Look out for your own bad habits.
Do you keep a budget? Do you have emergency savings? Do you purchase items on credit or with cash? Are your bills being paid late? Do you pick up fast food for dinner several times per week?
Your kid’s greatest teacher is you. And unfortunately, she is much more likely to learn by watching what you do than by listening to what you tell her to do. It’s just as easy to pass down good financial habits as bad one!
6. Look out for the green-eyed monster.
Greed and envy are insidious beasts that easily sneak up on us and our kids. This problem is especially prevalent in our technological age, where the next/newest, latest/greatest thing comes out daily. How many kids need an iPod just because everyone else at school has one?
The key to countering the green-eyed monster is to teach, from an early age, the difference between true needs and wants. This can begin as early as preschool, by cutting out pictures of items and having your child sort them.
7. Look out for apathy.
The worst thing we can do for our kids is nothing. It’s also one of the easiest things to do. Nothing is our default mode. We have a tendency to put things off until they become urgent.
It’s like ignoring the dog doo in the backyard, putting off the nasty clean-up duty because it’s not right in front of you. Put it off long enough, though, and eventually you’ll step outside to grill some burgers only to find your foot squished in a big pile of stink!
Rather than leaving our kids to step out into a world full of steaming piles of poo, how about we help them become literate on financial matters while they’re young?