September 6, 2011
By Brian Page, Financial Educator & Co-Creator of the Awesome Island Game
Mom, since Jack's Mom bought him a new Droid, can I have one?
Can you get me this piece of candy while we wait in line?
If you are a parent, these questions probably sound familiar. Looking past the obvious annoyance of dealing with a child's constant badgering for more and more, parents and educators are responsible for shaping their financial futures.
Most people want more than they can afford, and are unwilling to give up something now to save and buy what they really need later. Evidence ranging from the famous marshmallow study, our national savings rate, and a national debt that grew even in times of economic prosperity are compelling examples. Recognizing the problem and understanding the challenge is only half the battle. Addressing how a parent or educator helps shape a child's future financial behavior is necessary.
A few years ago my six-year old son and I were walking out of ‘EnterTRAINment Junction’. As always, the gift shop was strategically placed to walk through as we left, with children's toys at eye level. My son did not have his money on him, but desperately wanted a $10 toy lantern. I promised to bring him back later when he had his money, or loan him $10 now in exchange for $15 when he got home. He took the loan and walked happily out of the store. Once we got home, he gave me his full $15 in savings.
A few days passed and he again wanted a toy. This time he wanted a $5 Bakugan, so we drove to Target and he picked one out. I let him hold it for a bit and enjoy it before putting it back on the shelf. I explained to him that if he had waited to buy the toy lantern, he could have used the extra $5 to buy the Bakugan. He was crushed. This was a painful lesson on borrowing that cost him a $5 toy; a small price to pay for preventing a much more painful and expensive lesson later in life.
Most people learn through experiences, not lectures. As tempting as it may be to lecture our children about money management, have a plan and the necessary patience for them to experience money management lessons. Instead of just talking about the importance of setting a budget, have the patience to help them create that budget and experience the benefits of saving. Instead of just talking about the importance of managing a bank account, set up an age appropriate account for them and help them manage it.
Engage your kids in the learning process by empowering them to experience money lessons with their own hard earned money. I promise, they are a lot more likely to want to learn when the money you are teaching them to manage is theirs.
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