September 17, 2020
A recent survey conducted by Schwab asked Americans what they think are the most important “lessons” parents should teach their kids. On a scale of 1 to 100, money management was rated the most important skill kids need to learn (63), edging out the dangers of drugs and alcohol (60.5) and healthy eating and exercise habits (58.3).
For the record, as much as I am all about teaching kids smart money management skills, please don’t ever miss the opportunity to impart wisdom on healthy living. Being able to invest and save is not going to be worth much if a child grows up with unhealthy habits.
But let’s focus on the financial management issue. My question for parents is this: Right now, in the midst of the biggest financial jolt of our lifetimes, what are you teaching your kids through your words and actions?
For that is one of the most impactful ways children learn.
Don’t shield them. Don’t assume they will pick things up on their own, or that it is being taught in school. (In the vast majority of high schools there is no personal finance curriculum.)
I have heard from so many of you that you are doing okay because you followed my advice (okay, badgering) that a three month emergency savings account was not enough, so you’d been working to build an 8 month reserve. I hope you shared that decision with any teens in your life. They are at an age where they can absorb the importance of that decision and how it protected the family. Share your victory!
Have you suffered an income loss during this recession/pandemic but haven’t explained to your kids that the entire family needs to work together to spend less where possible? I get that this feels scary, but shielding them from this reality (and learning opportunity) doesn’t help anyone.
If you know that the financial impact of the pandemic changes the math of college for your kid, have you shared that information? If you can’t afford to pay for college, or will need to severely reduce what you can pay for, it’s not something to be ashamed of. That. Is. Life. But to not stand in your truth and let your teen know what the future looks like is disrespectful to your kid. The earlier you have this conversation, the earlier your family can start pulling together a fresh game plan. Maybe that’s starting at a community college. Maybe that’s a state school. Or a private school that will be so eager to have your kid it will offer a generous financial aid package. Teaching a child to stand in the truth of what is (and not get stuck mourning what “was”) is not just a money lesson; it’s a huge life lesson.
Are these hard conversations to have? I don’t think so. It should not be hard to be honest with those you love, and not having the conversations is what will eventually be hard, as it raises the odds your kid launches into adulthood without a solid foundation in what it takes to create a financially secure life. I know you don’t want that.