the secret to raising financially responsible children?

Last night, after having listened to a friend’s tales of financial woe, ‘Love and I got to talking about folks and finances—specifically, our observations about the households people are raised in and the adults that emerge.  Here’s what we observed:

  • We know a few people who were raised in homes where money was tight and parents were stressed.  In each case, the resulting adult has become somewhat obsessed with having a high-paying career and lots of STUFF.
  • We know numerous people who were raised in homes somewhere in the middle—money was neither stressfully tight nor blissfully abundant; parents provided what was necessary (usually purchased on sale) and children occasionally enjoyed the perk of a special toy or activity.  These children typically seem to turn out to be financially responsible adults, not over-stressed about money but not too cavalier in their spending, either.  (In at least two cases I know of, the children later discovered that their parents had been millionaires; in other cases, children later found that they had been living close to the poverty line.)
  • We know numerous people raised in affluent homes, where parents spent money generously to provide for their children.  Almost every adult we know who emerged from that type of household struggles to manage their money responsibly and live within their means.

The happy medium seems not to come from income level, but from treatment of money.  As long as you project confidence in your ability to provide, emphasize responsible spending, and find occasional ways to treat your children—not often enough that they come to expect it, or it loses its potency, and never at the expense of financial stability—children will, hopefully, learn to handle money well.

What do you think?  Do your experiences reflect what we’ve noticed about the people we know, or do you have a different theory?

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11 thoughts on “the secret to raising financially responsible children?

  1. Yes! I think that the attitude and honesty about money in a household also makes a huge difference. We know we should talk to teenagers about sex, but what about finances? What about teaching them to regularly balance some sort of checking account and learn how to budget? What about teaching them the importance of savings. I would guess that not many families of my generation did that.

  2. I agree! I grew up living with a want for nothing, to the point where I expected certain things that no “normal” child would expect. When I got older, and my family lost all of the money we had, I still had the expectation that someone was to provide FOR me, instead of thinking I needed to provide for myself and I was a very wanton spender. It wasn’t until I had two little guys to take care of that I realized the importance of perception when it comes to money. Sometimes, things are really tight and sometimes we have a comfortable cushion; but my oldest never knows. He has everything he needs with an occasional surprise gift, but he still saves his money and ask me if I’m making sure I buy things on sale. haha

    • Thanks for replying–it’s nice to hear from someone whose experience is different from my own. And congratulations on being able to overcome your own expectations to be a better parent!

  3. It’s absolutely not about the level of income but how we view money, I agree. I think the way parents also model stuff is important, so that if they value stuff a lot, as in they have to have great clothes and top vacations and food, regardless of whether that’s even important to them, then that also sends the message to kids that stuff is important.

    I’m pretty big on personal finances and want to ensure that my son will know how to handle money. I particularly want him to learn specifics like compound interest, earning more, spending on what’s important and spending less on what’s not, consequences, saving for big-ticket items, and the value of what money can and can’t buy.

    • I have a very similar outlook. My current dilemma: How on earth do I start communicating those things at this young age? To some extent it’s just modeling, but I’ve also read quite a bit that says that kids really need an allowance to better learn money values–but at what age? How much? (I actually agonized about this in a post a little while ago, which I linked to in an above comment.)

      • I may end up changing my mind in the future, but I actually don’t plan to give an allowance. My kiddo will learn finances with the gifts he receives and I want to encourage him to make his own money. He won’t get them through chores, but he can ask relatives to do their chores for them, or sell lemonade, etc. I want him to be entrepreneurial in addition to knowing how to work for money.

        I read somewhere that a good way to gauge when kids are ready to really handle money is to hand them a $1 bill and a $5 bill and ask them which one has more.

        But in the meantime, yes modeling and instilling values have a far bigger effect than any teaching can do, I think.

  4. I agree with Nina! I think that kids absorb what their parents do, not necessarily what they say. I also think that when we know better, we can pass that on to our kids. If we didn’t have the knowledge from our parents,how do we teach our kids? It’s up to us as parents to educate ourselves and teach our kids – it’s a different time now. Seems to me that going back to the way our grandparents did things (financially) isn’t such a bad idea.

    • It depends who your grandparents were! 🙂 I had one very wealthy, very thrifty set and one set that had grown up with wealth and didn’t know how to spend wisely. But in general, I agree–times have changed, and we can no longer count on having a higher standard of living and more income than previous generations. If we as parents don’t know how to cope with this reality, how will our kids learn?

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