It’s undisputed that marriage is the most crucial contract into which most of us enter. And, for many of us, kids are part of the picture before, soon thereafter, or later on after saying “I do.”
Before that blissful day, way before, each one of us has been unconsciously programmed about life, success, and money. Is it possible to program your children for inevitable financial success? Psychologists would argue that it is possible to condition children to either be financially successful or struggle with money.
As parents, what can we do?
Create an environment that allows for learning by doing
Almost every parent wants their children to have it better than they themselves did. So what is the key to raising money wise children?
Our friend Andy Hill over at Marriage, Kids, and Money says that it’s important to start early instilling the concept of reward (money) in exchange for work (chores). He argues that a regular allowance (being paid just for existing) is detrimental to a child’s development. He/she will learn early on that solving a problem, making someone else’s life easier, or contributing to the overall wellbeing of the house/society are ways to flex your income earning muscle.
Encourage Risk Taking
As a young kid, my first ever business was a lemonade stand in our front yard, by the road. Because of our remote location, we were lucky to have a car pass every half hour; consequently, sales were few and far between. Nonetheless, this was my first taste of entrepreneurship. I learned the importance of location.
Throughout middle school, I sold gum to classmates and traded sports cards, further lighting the fire of business and entrepreneurship.
Later, in my senior year of high school, I competed in a competition of future business leaders (DECA Club), and competed in the small business category, presenting a business proposal to potential “investors.” My idea was to establish a music store that allowed for trade-ins as well as new purchases. Hey, it was the late 90s – before Napster, iTunes, and YouTube! I ended up winning the state level competition and proceeding to the national competition. Needless to say, this served as encouragement for me to pursue business ideas.
While the children are young, encourage them to be creative and seek out opportunities to solve problems. Give them a sense of participation in their future. Get out of their comfort zone.
As guru John C. Maxwell said in his book Failing Forward: Turning Mistakes Into Stepping Stones for Success, “Fail early, fail often, but always fail forward.”
The key here is to instill a sense of fearlessness – learn to not be afraid of failure, but to embrace it, learn from mistakes, and course correct along the way. After all, today’s fearless risk takers are tomorrow’s business owners, entrepreneurs, and leaders.
The Takeaway: by forming a foundation of fearlessness and acquiring experience, you equip your children to learn by doing and pivot
Mindset is everything
Along the same lines as creating an environment where trying and failing (and learning from failures), also crucial to building successful little people is creating a mindset haven. This means that the child’s natural state should be one where he/she expects success in all endeavors. By telling yourself that you are a success even before starting, you are much more likely to achieve the desired results.
“When you enter a mindset, you enter a new world. In one world (the world of fixed traits) success is about proving you’re smart or talented. Validating yourself. In the other (the world of changing qualities) it’s about stretching yourself to learn something new. Developing yourself.”
Mindset: The New Psychology of Success, by Carol S Dweck
“My mother said to me, ‘If you are a soldier, you will become a general. If you are a monk, you will become the Pope. Instead, I was a painter, and became Picasso.”
Make home a place where success, planning, and expectations are reality
Talking openly about ideas, breaking down how success is the result of repeated consecutive actions – learn-try-fail-repeat – and giving the children the freedom to experiment themselves (providing assistance when called for) will empower your children to think for themselves, and desire to achieve greatness…because it’s who they are.
Communication, communication, communication
Regular, scheduled family meetings
This is a crucial piece of a well-run household, in my opinion. Whether it’s weekly, biweekly, monthly, or quarterly, schedule and keep a meeting between all members of the family.
Communication is key. Building the regular habit of openly sharing among each other your projects, successes, struggles, doubts, fears, and anything else on each person’s mind, the family becomes invincible! Each member will look forward to sharing and getting honest, actionable feedback. Trust is built and the self confidence established through regular, positive pow-wows will expand into every crevice of each person’s life.
Family meetings are a safe space, and everyone (parents included) should feel free to share whatever is on their mind without the fear of being judged.
If you like the idea, but would help getting started, check out this resource.
Turn communication from a habit to a way of life
There is so much to be said about the key role that communication plays in the lives of successful people.
Whether it’s the weekly family meeting ritual, leaving notes of love and encouragement for each other, or sharing in family dinner every night, communication gives permission to children to express themselves openly.
Our family meetings are a weekly occurrence, every Sunday evening. This gives us a chance to set the tone for the week ahead, and address any struggles from last week. I generally open it up by naming one success, one challenge, one thing I learned, and one thing I’m grateful for from the previous week. Do whatever works best for your situation.
(Pro tip: this can also be done with a group of close friends over coffee, drinks, etc.)
The Takeaway: Open Communication is key to ensuring future financial success. Make home a place where ideas are discussed openly and without fear.
Communication and Compromise
When we met and later got married, I was working at Vanguard, and often had high level conversations with her about the importance of saving, budgeting, and conscious spending. It was through these informal conversations that we started building an understanding and trust with each other.
When we were blessed with not one but two premature babies less than one year apart, I believe that the benefits of these conversations came into the light…rather than panic and scarcity, we were able to receive outstanding medical service in one of the best neonatal centers in the world. During these stressful and trying days, we did not have to worry about making ends meet. #TeamEmergencyFund
The point is that, though having crucial conversations with each other in a casual, non-threatening way, you build trust, understanding, and a future together as one.
Before getting married, my now-wife and I dreamed big…she accepted me and all my ambitious ideas in life, and I’d like to think that I’ve had a positive influence on her mindset over the years.
When our two children were born (surprise!), I was working full time for The Man, and she cared for and raised them through infancy and young childhood. She’s my perfect opposite in terms of creativity and the arts. She entered a recipe competition at a local organic food chain, and ended up winning the whole shebang. I had no idea until I received an iPod for Christmas that year…and discovered The Stacking Benjamins Show the following year, in 2014.
The point here is that, through communication and playing off each others’ strengths, we are able to present a unified message to our young children – about life, values, and money topics.
Speaking of family, it is essential for parents to be on the same page when approaching the topic. Having a unified message of success and expectations will plant the seeds of certainty in the child’s mind, leaving no room for doubt, mixed messages, or insecurity.
“My family is everything. I am what I am thanks to my mother, my father, my brother, my sister…because they have given me everything. The education I have is thanks to them.
Get on the same page with your partner
Whether it’s periodic meetings to check in or a more formal written out plan, work together for the betterment of your little ones. By having that understanding and open communication, the children will witness the constructive dialogue and that will become their expectation of what a normal, healthy relationship looks like.
But Joe, I’m a single parent
If you are a single parent struggling to provide the life you would like to your child(ren), there are steps you can take that will benefit your current situation as well as that of your child(ren).
- Create and stick to a written budget. Be sure to include savings as a top priority.
- When they are old enough, include your child in money conversations. Take away the taboo of money, and shape their brains to be aware of what role it plays in their lives.
- Encourage your child to create their own budget and spending plans. A popular approach is to divide money-in into 4 categories: Spend, Save, Invest, Donate. Feel free to adapt according to your circumstances.
- If needed, seek help. Nobody can do everything on their own. Sometimes outside help is needed. Many organizations are out there to help people in tough situations. I’d encourage you to find a therapist or money coach with whom you can meet to discuss your specific needs/situation.
I come from a family of savers and investors, and am very fortunate to have that experience. My better half came from a military/public service background, one where it was understood that the pension would be there for you in the future, and savings/investing was only for the upper class.
These life-forming lessons from childhood have carried through to our marriage, and have caused points of contention in the money department. Not spending the entire paycheck, prioritizing investments over impulse buys, paying ourselves first, goals-based bucket approach, etc. are concepts that I always took as normal for a family rather than her normal of spending every dollar because you never know when is your last day on earth.
Takeaways and action steps
Each one of us is in a unique situation with varying needs. The most universal advice that applies to nearly every situation is to:
- Create a budget/spending plan, with wealth building/savings/investing as a line item near the top.
- Be open (as much as possible) with those around you about your situation and priorities. Seek out professional help if you don’t have anyone to talk openly with.
- Reward yourself for accomplishing milestones.
- Rewrite your family’s legacy. Change history and make the next generation even better off – by building money habits and expectations.
What have you found that helped your kids learn about money? Comment below and let me know!
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