Megan writes in:
I’m by far the most financially sensible person in my family. I spend far less than I earn, yet I’m happy with the things I do have. I have my retirement savings in very good shape (even after the mess last year!) and I have a big emergency fund and almost enough savings for a 20% down payment on a nice house – and I’m only 26!
Recently, I spent a weekend with my older brother and his two children. They both receive an allowance, but their mother indulges them constantly and allows them to spend it without even thinking about it. I would like to do something to help these kids get a good financial education when they’re young so they don’t make the mistakes that most people make in their twenties that haunt them forever (I made some of my own, too).
What do you think I should do? What’s appropriate to do?
I find myself in a similar position whenever I’m around my own nieces and nephews. There are many thing I wish I had the opportunity to teach them, but my window of opportunity for doing so is extremely limited.
In my own life, I’ve found the most success when I stick to these principles:
Connect with the children as deeply as possible. The absolute best way for a non-parent to connect with a child is to get down at their level, listen to what they say, and talk to them as if they were an adult. Do that frequently and children will quickly begin to like you and see you as something of a mentor. Doing this makes it much easier for you to introduce ideas to them – they’ll be open and receptive to what you have to say.
Offer nonthreatening advice to the parents. One really effective way to do this is to give them a book or something practical that helps the parents with the financial teaching process. For example, you could give the parents a copy of the book Raising Financially Fit Kids by Joline Godfrey. Offer it not as a criticism of what they’re already doing. One great way to do this is to say simply that you had money problems when you were younger and you’d love to be able to help those children you love not have the same difficulties you had. Most parents will appreciate such parenting advice given in this fashion.
Give gifts that reinforce money lessons. A powerful way of doing this would be to give a child a Money Savvy Bank as a gift, with a small amount already in each slot of the bank. Then, encourage them to split their allowance – or any other money they get – among the pieces of the jar. The bank comes with a great parents’ guide as well, one that might encourage the parents to get involved and reinforce the lessons of the bank.
Lead by example. If you have a strong connection with the children, they’ll want to emulate what you do. You can thus ingrain good financial choices in them by simply behaving in a financially responsible fashion yourself. Take them shopping with you and show them how you do it – make a list, don’t buy stuff that’s not on the list, etc. Tell them your own goals for the future and say you put aside money every week for that goal. Then, show them that you’ve achieved that goal when you do (like when you buy a car or some other tangible item). Don’t fill your house with lots of stuff – reject consumerism, but do it without bragging about it or dropping names. Walk the walk – children notice.
Be positive about good financial choices. When you notice the child making a good financial choice, compliment it. Positive reinforcement works far better than negative reinforcement – negative reinforcement is mostly used because it’s easier.
Good financial habits don’t appear out of thin air. They require good role models and examples that show the benefits of living in a financially stable way, as well as basic ideas on how to do it yourself. You can drop these breadcrumbs in the lap of any child if you do the groundwork of connecting with that child first.