The author of this post is Charles Tran
Parents are teachers without lesson plans and chalkboards. We school our children in the way of the world from the moment they wake up in the morning to the moment we kiss them goodnight. Our days are filled with showing them lessons in responsibility – tie your shoes, don’t forget your homework, eat healthy.
But it’s not always one-way street. Sometimes, the roles get reversed, and they give us a lesson or two. Many times our kids possess an instinctual understanding of things that we lack or have forgotten – such as money smarts. Feeling the need for some good reminders about how to manage my finances lately, I observed my children’s amazing adeptness at money matters. Here are financial skills our children can teach us:
1. Focus on what you want
When there’s a product that captures my son’s interest, he pursues it with laser focus, and I don’t think he’s alone amongst his peers. Ask any kid you meet today what they’d buy if you gave them 40 bucks, and I bet they’ll have a ready answer. My son will tilt at Product X until he has saved enough money to buy it, even if it takes months. If I could mimic that same intensity, maintaining the image of a single object and saving until I could purchase it, my money would be more thoughtfully spent. Instead, I’m prone to scattershot purchases that lack focus and forethought. Chalk one up for the little guy.
2. Grasping the value of small amounts
My children can spot a quarter on the ground from 20 paces. They look for loose change under the couch cushions and in the car seats, because they understand the simple math: dimes and quarters make dollars and eventually those dollars deliver the goods. It sounds elementary, but too often I lose sight of the dimes and dollars that could add up to a lot of pocket change. From saving a few dollars by buying what’s on sale at the grocery store to signing up for and wisely using cashback programs on my credit cards, if I would just employ what my kids already practice, maybe I could afford to give them a better allowance – or would that be a consultant’s fee?
3. Make only planned purchases
Since my kids don’t usually carry their money with them, they do not fall prey to spontaneous expenditures. Instead, they keep lists of what they want and are constantly adding and dropping items until they have identified their top priority items. And those “please buy me this” items at the checkout counter never even make it onto the list. If I practiced that same discipline, I could avoid hundreds of dollars worth of spontaneous spending on short-lived hankerings. Learning to cool my heels in the purchasing department would serve me well, not to mention boosting the family budget.
4. Living within your means
Children understand that the money on hand is all they’ve got. They haven’t yet learned about loans and credit. Leaning too heavily on money that we haven’t yet earned can become a bad habit – and a recipe for debt overload – if it’s not done with foresight and careful planning. Sometimes we’re better off putting the credit cards away for awhile, to catch up on money we owe and practice better spending behavior.
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5. Keep close tabs on your money
My kids don’t use piggy banks, because that’s just too mysterious. How can you admire your money if it’s out of sight? They love laboriously adding up their savings. Every fresh quarter or dollar sends them into a counting frenzy. And equally, each expenditure requires another round of cash counting. I am not so diligent at keeping track of my cash flow. With direct deposit for the paycheck and autopay for regular bills, I can go weeks without monitoring how much cash I actually have in my account. Time to follow my kids’ lead and count my pennies before an overdraft occurs.
6. Appreciate the money you do have
When my daughter receives a birthday card with a $20 bill tucked inside, she snatches it up and races to her wallet. And yet another counting session begins. She values each dollar, never taking it for granted. This monetary appreciation is admirable, and one I frequently lack. Money comes and goes beneath my notice, or worse. When I receive a check in the mail, instead of taking a moment to be grateful, I usually roll my eyes and add “deposit check” to my long To Do list. My daughter is teaching me gratitude.
7. Don’t be ashamed of what you have – or are missing
My son will announce to anyone and frequently everyone how much he has in his bank, even if it’s $1.75. He has no qualms about telling people how much money he has and attaches no self-worth to his net worth. We adults on the other hand are not so savvy, are we? I’m as guilty of attaching own self-worth to my financial standing and believing that others will judge me this way as well. But who I am and my place in the world has nothing to do with how much money I have in the bank. My son knows this.
Charles Tran is the founder of CreditDonkey.com, a credit card comparison and financial education website where young families can learn how to save money and make savvy decisions about credit.
Image Credit: Kevin Dooley