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How to Teach Your Kids About Money: Part 4

Authored By: Chris Cooke on 7/13/2021

In the last post in this series, we talked about the importance of getting your own financial house in order. It may not seem important, but if you want a chance of teaching your children good money habits, it's essential. In this post, we'll be talking about giving your kids some perspective on money and wealth in the world. Without perspective, it's easy to fall into the trap of constantly chasing 'more.' More money, more spending, more stuff. But the truth is, not everyone needs to be insanely wealthy to be happy. Studies show that quality of life is improved by increased wealth to the point of diminishing returns. Don't get me wrong. There's nothing wrong with making millions! But, in many cases, a happy, comfortable, and all-around fantastic life doesn't require it.

At the end of the day, money is just a tool, a means to an end. It's not the end, in and of itself. Being smart and savvy with money, and teaching your kids to do the same, is a great idea. But, accruing wealth is like fitness training. Not everyone needs or wants to be a chiseled, muscly powerlifter. Of course, it's recommended that you get into good enough shape to live as long and fruitful a life as possible. Specifically, to have the energy and fitness level required to do fulfilling things - like playing with your kids or grandkids, hiking, skiing, traveling, or whatever it is you enjoy doing. Basically, you need enough fitness to live life well and to feel good. It's the same with money.

This raises several important points.

  1. It's a good idea to clarify how much money and income it would take to live your ideal lifestyle. In fact, it can be a fascinating exercise to actually cost out what kind of money that ideal, fulfilling lifestyle would require. Hint: it's probably a lot less than you think!
  2. Wherever you are in your life or on your financial journey, it's important to be thankful and exercise some gratitude. Life, with all its challenges, problems, and annoyances, is still pretty dang good! And a healthy practice of gratitude in your life can help you keep this fact top of mind and help you gain some perspective regarding your finances. And that leads us to the crux of this article:

3 Tips to Help Your Kids Develop a Healthy Relationship with Money.

1. Teach your children to be grateful.

One of the best things you can do as a parent is teach your kids to practice gratitude - gratitude for what they have in their lives - the people, relationships, experiences, and stuff they already have. It's very easy, especially for kids, to fall into the trap of always wanting 'more.' More toys, more stuff, more money. 

Now, there isn't anything inherently wrong with having or pursuing more. But it can become a type of addiction to stuff that doesn't necessarily bring more happiness. Teaching your kids to question their purchases through the lens of "Will this thing I want to buy really bring me happiness? Or will it just be more stuff to pick up dust and clutter my space?" You can easily see how this could carry into adulthood: Will this new fancy [Kitchen Appliance, Giant TV, Massage Chair, etc.] actually improve the quality of my life, or will it just be more stuff cluttering up my home? Will I actually use it? Or am I just wanting it because my friends have one, or think it's a great "thing?"

Conversely, teaching your children to be grateful for everything they already have is a great habit to instill. Did you know that the practice of gratitude has been shown to bring with it many benefits, including improved health, longevity, and even energy? Check out these 31 ways that gratitude will make your and your child's life better.

Teaching Your Children to be Grateful

Step 1: Model It

The first step to helping your kids develop a mindset of gratitude guessed it...lead by example! If your kids witness you and your partner exercising your gratitude muscle on the regular, they're much more likely to pick the habit up themselves. Here are a few tips to help you get your gratitude attitude fired up.

Step 2: Start with the basics - get your kiddos to say thank you! To their sister for sharing her toy. To Mom for the homework help. To Grandpa for the delicious cookie. To Mr. Jones next store for letting them play ball in his backyard. (Haha. Just kidding, kids don't "play ball" anymore, whatever that means. We both know your kids are inside playing video games ;)

But seriously folks, simply reminding them 27,893 times per week can ultimately result in a well-established habit. And the habit of saying thanks can easily be parlayed into a more significant habit of feeling thanks in general. Thanks to God, the universe, nature, the creator, the world, etc., Thanks for life itself. Thanks for a beautiful sunset, for loving friends and family. Thanks for the roof over their head and the food in their bellies. And even thanks for the problems in life that lead to growth. Feeling thankful, feeling fortunate, and recognizing all the good around you can improve your (and their) whole outlook on life.

So, yeah. Sounds simple, but this simple habit can develop into something quite profound.... thank you very much.

Step 3: Have conversations about it. Another great way to foster an attitude of gratitude in your kiddos is to talk about it generally and ask questions about it in particular. In fact, research shows that asking kids questions to get them thinking can foster a more profound sense of gratitude.

So, be on the lookout for opportunities to discuss gratitude and what they're grateful for. Here are a few questions you can use to get the ball rolling.

  1. What things in your life are you grateful for? How about experiences? And what about people? Are you grateful for any of the people in your life? Why?
  2. What do you think about this gift? How does it make you feel? What about the experience of getting and having this gift makes you feel happy?
  3. What are some ways you can show how you feel about this experience or gift? How could you share this feeling with someone else?

For more ideas, check out this framework for teaching gratitude.

2 Give them perspective.

The fact that you're reading this blog post means that you are possibly in better financial shape than the vast majority of the world! Crazy, I know. There are people in this world whose annual income equals what you might spend on coffee in a year. Or who don't have plumbing in their homes - instead of turning a faucet for fresh water, someone in their family walks miles each day to haul water for drinking, cooking, and washing back to their dirt floor home. Or who can't imagine driving a car to get to a 'job,' let alone owning one! No matter how tough and stressful your finances can feel sometimes, much of the world is struggling harder. Much harder. It's helpful to remember this fact and to share this perspective with your kids. I do not mean to say that you should teach your kids to compare themselves to those less fortunate. Instead, help your children keep in mind that they probably have it pretty dang good. Just as there will always be people less fortunate, there will always be people more fortunate. 

In fact, following along that line of thought above, comparing yourself to those less fortunate or your neighbors, or trying to keep up with the Joneses is an easy and tempting trap. But it's not a productive way to operate. In fact, keeping up with the proverbial Joneses can lead to obsessive or disempowering spending habits that bring stress, anxiety, and worry with them. And you can most certainly end up spending money on things you don't value yourself and that don't bring you any kind of genuine fulfillment, other than keeping up with you-know-who! Well, to heck with the Joneses! They don't matter to you! 

Instead, remember that you're probably in a pretty good spot, all things considered, and work to improve your finances for your own sake, not to compete with the family next door! First, deal with whether you feel secure and stable TODAY; are you prepared for the future and for things that may come your way? Then, once you've got the basics covered, start making your financial purchases based on the question, "Will this bring happiness and value to my and my family's life?" Not on whether it will help you keep up with your neighbors.

3 Teach your children to help those in need.

Teaching your kids empathy and compassion from an early age is certainly a worthy pursuit. Teaching your children to help, give, and be generous goes hand in hand with that pursuit. Plus, charitable generosity is part of a well-rounded financial education.

One of the best ways to do this is to lead by example - teach and explain WHY you give as you do it. Then, get your kid involved in the process. Solicit their opinion and input when choosing charitable organizations and causes to get involved with. While actions typically speak louder than words, especially when it comes to parenting, a little supportive explanation can go a long way to help your kiddos connect the dots.

Help your kids understand that there is a need to help in the first place. If your kids are growing up in a stable, middle-class household, it can be difficult for them to understand or wrap their heads around the concept of need. It may just be too abstract. You have to get involved on the ground level and meet some people. When age-appropriate, start conversations with your kids about homelessness, hunger, and other serious issues that many people face. When ready, take them to volunteer at a soup kitchen, a food bank, a pet shelter, or perhaps a children-focused fundraiser. If possible, have them meet real people in need. Bringing a real name and personal story to the situation can help them develop empathy and fuel their drive to help and do something about these issues.

While it's undoubtedly valuable to teach your kids about empathy and giving, it's equally important to teach them not to compare themselves. They aren't better than someone because they live in a bigger house, or a house at all! Nor because they have toys, swing sets, and shiny new bikes. Conversely, they aren't worth less than someone with a bigger, nicer, fancier home, either. Everyone is dealt a unique hand of cards in this life.

  • Sometimes people make bad decisions.
  • Sometimes people are victims of injustice.
  • Sometimes, through no fault of their own, people fall on hard times because...well, just because.

Teach your kids to be grateful for what they have and compassionate for those with a more challenging lot in life. Show them how to be empathetic towards others whether they're struggling financially, emotionally, or in some other way. Instilling an attitude of gratitude in your children is an incredible opportunity to bond with them while setting them up for a happier, more fulfilling life. Not to mention the effect that empathetic, grateful children will bring to society as they grow into positive, productive adults. Imagine a world where most parents did this. Now that's a world I want to live in!

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