[Week 11 of 52 Weeks to a Better Relationship With Your Child]
What amount of money is perfect for raising children?
If you had all the money you wanted, would it make your relationship with your child better or worse? That is, of course, a trick question. It is not how much money you have that makes a difference, but how you handle your financial affairs that matters.
It is the LOVE of money, not the money itself which is the issue. I would rephrase that to say the love of your financial image. I have seen people be just as arrogant about their state of poverty as Scrooge is about his pile of money.
Your children are subconsciously observing your attitude toward money from a young age. They see:
- how you talk about it
- how you spend it on the household
- how you spend it on fun
- how you spend it on them
- how you cooperate with the other parent about it
- how you save it
- how you share it
- how you guide them in using it
Soon enough, they are trying to figure out how they can access money, because it is an important step to independence. What you need to teach them is that it is not about how much money you have, it is about how you manage what money you have. This is a lesson that will affect all their relationships and prosperity for the rest of their lives.
1. How you talk about it
Money is a tool. Although exchange of products and services could exist without it, money makes exchange much easier and more convenient. It is a way for people to cooperate with each other. It is simply a tool. Some people use it well, but others use it poorly.
Money is like fire. It can stoke the engine or it can burn the building down. It all depends on how it is handled. But we have an advantage with money that we don’t have with fire. Money will only get out of control if the person uses it in an out of control way. There are no natural physical forces that will make money destructive. Its destructiveness or usefulness is completely dependent on its owner.
Money cannot exist without an owner. It is only money when it is being used between people to make an exchange. Money as money can only have value if the people exchanging it agree to that value.
Money works for people, whether they understand it or not! If you want a good introduction to how money came into existence or how it works, then I recommend Honest Money by Gary North. But you don’t have to have a detailed historical and economic understanding of money to talk about it the right way.
Your children will benefit in many ways from hearing you talk about money much like you would talk about the family schedule. How can you make it work for you and your family, applying priorities in spending it and trying to make the most of it? Avoid wasting time on being jealous about other people’s money. Talk about it like it is a tool.
2. How you spend it on the household
When I was about 12, I asked my dad if we could spend some money on something I was interested in. I honestly have no memory of what it was because his response made everything else pale in my mind. Instead of ignoring me or telling me I was ungrateful for all his hard work, he gently asked me to come over to a chalkboard he had in his office. Then he simply and quickly went over the family monthly budget with me. When we were done, there were $33 of discretionary funds left over. That number has obviously stuck with me.
What also stuck with me was that he had a plan and kept track of where money was going. Keep in mind that my parents started a family relatively young and started from $0, so having a household budget at all was quite an accomplishment. Over the years, that diligence made a huge difference in their level of prosperity and standard of living.
Another thing I remember thinking was that I certainly didn’t feel like I was living in poverty or deprived. We always had plenty to eat and very decent clothes. I was surprised that keeping track of money was even a thing that needed to be done. I learned that living on a budget was about living well with what was available.
With this excellent example, my husband and I have been inspired to live well within our budget. While this might seem hard at a given moment when a “thing” would be really nice to have or you want to “fit in” with a certain crowd, it drastically reduces overall stress in life. As a result, we have been debt free for quite a while.
3. How you spend it on fun
When I was a young mom, I remember hearing an older, wiser woman say that none of us deserve good things to just be given to us. At first, I was a bit confused and maybe irritated. After she had explained, I realized what an honest and helpful perspective that was.
If we work for something, then we have earned it. However, there is always an element of opportunity that is beyond our control. Whether it be when we were born, to what country we were born, or with what talents we were born, we do not have full claim to our success. As such, when we do have opportunity to spend money on fun, we should always do it with gratefulness.
The flip side, we don’t need to feel guilty when we have fun either. It is okay to spend money on fun. Certainly choose fun that is within your budget and priorities, but one of the advantages of a free market money system is that it makes fun more affordable and available for exchange.
Let your children see you enjoy life, no matter what your budget. Teach them how to have fun inexpensively sometimes, but how to treat yourself to a nice vacation you have saved up for. Enjoy life with your children.
4. How you spend it on them
Your children should never feel that you begrudge spending money to take care of them, yet neither should they feel entitled to your money. It is fine if they know you get tired from work or have to problem-solve spending conflicts. That is just being honest about life. What isn’t fine is if you make them feel they are an unwanted financial burden.
If you want a good relationship with your children, they need to know without a doubt that you are dedicated to providing for their real needs. I’m not talking about everything a child might think he or she needs. I’m also not talking about a lot of things that are culturally spoken of as “needs.”
Most families quickly move past spending on needs to spending on things that are potentially helpful. Depending on the family, this might be anything from books to animals. It could be items for learning or items for gaining physical strength. Whatever it is, the children should be trained to have an expectation of parents deciding how best to use the money. The children should kindly be made aware that parents have earned and are in charge of and responsible for that money. Parents should not give in to being treated like a credit card or using money to placate whining.
A common question among parents of children entering young adulthood is “how much should I require my children to pay for their own things?” I know parents who think it is a necessary financial lesson to require that their children buy their first car, pay for their own insurance, or pay their way through college. It has been my observation that the exact financial cut-off does not make any difference.
What makes a difference is that the child knows that any help or support received should not be taken for granted. I will talk more about that in later sections. Suffice to say that making someone pay for things does not make them use money responsibly. If that were so, not so many people would be in debt.
5. How you cooperate with the other parent about it
It is still true that another parent is usually involved in a child’s life. No parent should ever use money matters to manipulate how a child interacts with another parent. Parents should present a unified front, cooperating not only for the good of the child’s relationship with the other parent, but also because doing anything to harm one parent’s financial well-being also harms the child’s prospects.
I think the best way to cooperate is to have one shared family budget. To do anything less is to send the message to the children that the parents do not really quite trust each other and are not totally committed to each other. It also probably means that the children have to go to different parents about different financial concerns, so that the parents lose the advantages of being a team on issues.
6. How you save it
As each of my adult children have gone out into the world, they have come back with stories about people who complain about being poor. In all cases, it has been quite obvious that the only thing poor about these people is their budgeting habits. They constantly spend spontaneously. They make no effort to save. They might as well be complaining they have no friends, but be refusing to talk to anyone.
Saving money is something that wise people do. It might start with something as simple as a short-term stash for emergencies. It will hopefully grow into having enough to invest in land or companies. If your children see you doing these things, they will respect you and they will learn. They will want your advice.
7. How you share it
There is always someone asking for money. Always someone with an apparently pressing need. Always a problem that someone thinks more money is the answer to.
Sharing with those in need in ways that are really helpful is an art. It can rarely be done by just giving to an organized charity or by giving handouts to whatever cute child comes to your door.
It can be tempting to just share in easy ways that make you feel good or at least make you feel less guilty. However, truly helpful sharing is usually done best when we are willing to be part of a person’s life. That is why parents are in a good position to know how to share with their children in ways that provide opportunity without discouraging responsibility. Ideally, that is what sharing with anyone would do.
Our children are aware of much of the sharing we have done outside of the family, but only because we want them to 1) learn to share, and 2) be wise in sharing.
One of our foremost principles in sharing our money is that we do it very privately. This is not only to try to avoid praising ourselves, but also for the privacy of the others involved. We also never want someone we have shared with to feel they owe us anything.
Sharing hard earned money, especially without taking tax breaks or getting your name on a wall, is an important example of living unselfishly. It will be one more example to your children of why you can be trusted.
8. How you guide them in using it
Children have few opportunities to earn money. Sometimes they get money as gifts. Allowances are sort of like gifts, but can be treated differently.
If you will take time to guide your children in keeping track of and spending their money, you will have many opportunities for good conversation. When they are young, they will have basically no concept of money, but you can usually still give them a small allowance. There is nothing quite like having your own funds to ponder to make learning about money interesting!
When we gave our young children an allowance, they understood that it was still under our supervision. We required that they set aside a certain percentage to save, a certain percentage to share, and the rest (the majority) was theirs to spend or save as they desired. We made the allowance easy to calculate and based on their ages, so it also became a math exercise that they were personally involved with.
Any purchases had to be approved by us, since we, as the parents, were responsible for what was brought into the house and what the children were exposed to.
We also often gave them a chance to earn a few extra dollars for doing chores above and beyond the normal ones. From pulling weeds to extra ironing, they learned what it was like to earn a wage based on time and experience. They learned that work translated to money which then translated to opportunity.
All the while, they learned they could get helpful insights from us. Where should they keep their money at home? How much was a good price for this toy? How long would it take to save for (fill in the blank)? Did they have enough money to invest yet?
Money is personal
Money is a very personal subject, especially when it comes to how much is made and how to spend it. Talking about these things with your children will open up communication about their hopes and dreams. It will give you a chance to encourage and teach about a crucial aspect of adult life.