Teaching Money Management – How We Do It

In How Families Teach Children About Money, Jenny Holland writes that a child’s attitude towards money (and his/her potential in later years to manage it wisely) are influenced by three key factors: financial knowledge, engagement with money, and his/her value system. She says that early on, they shape this attitude by observing how their parents handle money, and we all know that children internalize and repeat what is done in front of them continuously. In absorbing their parents’ attitudes, they learn to associate money with strife, status, independence, or whatever else it represents in that household. I recently explored this with two children in my circle to get an idea of how their parents are developing Holland’s three factors to encourage good money management habits.

At 11 and 9 respectively, Shane, Jr. and Liam, who live just outside of Jacksonville, FL, USA, already have a good concept of money. The consistent conversation around money in their house has taught them that they can’t always get the toys they want right away. This has meant to them that sometimes choices have to be made about what to buy: choices between important stuff and “the real things that you actually want”. They understand that sometimes it’s necessary to wait before buying “so you [aren’t] in…debt your whole life”.  When they ask for a toy and parents Shane and Michelene remind them of what they asked for a few days before, they understand that there is a limit to the money available at any given time and that it won’t be spent carelessly. 

Shane, Jr. and Liam interact with money through modelling gigs and reward opportunities at home. When the modelling agency pays them for a photo shoot, their parents bank the money and regularly update them on their balance. At home, money occasionally functions as a reward for taking initiative beyond their designated house chores. Liam sees this as a win for everyone: when he does some extra helping out and gets a little bonus, “the house is clean, so everyone gets something out of it”. Shane prefers this to giving an allowance for regular chores, reasoning that “I’m not going to pay you to wash the dishes you just ate out of”. Their “job” right now, he said, is to get good grades and be the best they can be. They have no business worrying about money. 

Thanks to these healthy ways of learning about and interacting with money, the boys are developing their own positive value systems around it. In our conversation, what came through clearly were the values that Mom and Dad have instilled through a consistent example and dialogue, such as delayed gratification and careful spending while still enjoying what they’ve bought. The boys get that money isn’t only a tool to purchase material things but also a doorway to intangible benefits like freedom, independence, and comfort: Liam confidently said he wants to work for himself instead of being managed by other people and Shane, Jr. values using money to enjoy a happy, balanced life. 

During our conversation, I often compared these boys’ experience to that of my own childhood and appreciated all over again how consistently involved my own parents were. I truly believe that this continues to be the moral of any successful story of raising kids. We were talking about money management, but we could very well have been discussing schoolwork, learning good manners, or developing a spiritual life. Shane and Michelene live the example in front of their children and constantly involve them in the conversation. They give Shane, Jr. and Liam chances to make small decisions with their money while standing in the wings to guide them as necessary. By the time the boys are old enough to make their own money, they will be decently comfortable balancing between comfort and control in their spending to create the fulfilling lives they anticipate now.

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