Teaching kids about money is one of the greatest gifts we can give to future generations. This is a topic I discuss on a regular basis. I do not think it can get enough emphasis. For some reason, there is a huge stigma in our society when it comes to discussing financial topics. This causes untold hard to millions of people who end up struggling with money. Financial literacy must be a priority.
To demonstrate how prevalent this issue is, look no further than a study from Wells Fargo. Respondents rated money the most difficult subject to talk to others about! Money and finances (44%) rank higher than death (38%), politics (35%), and religion (32%). You know that old saying, “don’t talk about politics and religion”? At least there is some dialogue around those topics! Unfortunately, it usually involves arguments, but that’s another story. It’s obvious that talking about money is a major societal problem.
Why Don’t We Teach Kids About Money?
There are many theories on why our society reacts this way. I know in thinking about my own personal experiences, my grandparents in this country were children of the depression. Both were born in rural Western Kentucky on farms. They knew what it was like to live in total abject poverty. I can only imagine what life was like for them during those years. My grandparents in Germany grew up in similar circumstances, and then lived through the recovery from a devastating war. They truly saw the worst that humanity has to offer.
I often wonder if some of the stigma around money comes from that generation. I say this with empathy and seeking understanding, not looking to “point the finger”. Having seen so much struggle and difficulty, it could not have brought many pleasant memories. My grandparents didn’t share parts of their past with us grandchildren. It wasn’t because they were hiding anything, I think they really just wanted to protect us.
Part of the human experience is learning how to cope with painful memories and topics. My grandparents have been gone for a long time, but it was hard for them to discuss many aspects of the past. Whether it was the depression or the war, there weren’t a lot of great memories from their youth. Even though childhood should be a time of innocence, that generation had to grow up fast. Having endured those times, many people never had a chance to learn about good money management.
Financial Topics and Constant Change
The economic climate of the world has gone through massive change. Before World War II, most people paid cash for everything. A family might have a mortgage on a home, but they didn’t know what credit cards were. The first major credit card, Diners Club, was not issued until 1950. American Express is now a household name, but it wasn’t introduced until 1958. It seems like a long time, but it’s a relatively short period in which the game of money has seen some serious changes. If you don’t know all the rules, it can cause a lot of damage.
The current economic environment is challenging. The cost of living keeps getting higher. Proper health care is expensive. Education costs continue to skyrocket every year. We live in a consumer-driven society. There are new toys available to tempt us constantly. Things that used to be considered luxuries are now viewed as necessities. It is incredibly easy to live beyond your means. It takes a lot of discipline and effort to master financial challenges.
Tackling the Challenge to Teach Kids About Money
How can we improve the discussion for teaching kids about money? I think it’s like any other problem. As a society, we need to tackle it head-on. Thankfully, some of the barriers around important topics are collapsing. These are important conversations that need to start at home. Unfortunately, most couples find it difficult to discuss money. It’s the number one predictor of divorce in the United States. If we can get parents talking about money, these conversations can get down to their children.
I think one of the issues people face is their own confidence with money. If you do not feel confident about a topic, it’s hard to teach others about it. Also, there is a lot of guilt and shame around money. Talking money brings out very powerful emotions in people. Studies indicate that our money habits are established by the age of 7. If those habits are not set on a firm foundation, it can frustrating to overcome setbacks. Obviously, if you were raised in an environment where money was never discussed, it’s going to be a challenge to start.
Talk Openly and Honestly About Money When You Can
There is strong evidence that people who are willing to talk about money tend to succeed. Studies show that people who speak openly about finances have less credit card debt and are less prone to impulse spending. Open dialogue in the family also leads to less arguments and stress around money. Even if you and your significant other are not totally on the same page, that’s fine! Life is built on compromise and working toward solutions. As long as you both have good long-term intentions, that is a great start. We are all human, and we have biases that we deal with. Getting someone else’s perspective on a matter can be really beneficial. Two heads are better than one!
The Power of Accountability
I am a huge fan of accountability. If you have a goal, the best thing you can do is talk to others about it. That will help provide motivation and accountability. There is a great study from Stanford University about fitness and accountability. In the study, people were held accountable either through a meeting with a personal trainer or with a phone call. The group that worked with the trainer performed the best, but the group with the phone reminders did almost as well. They did significantly better than the group with no reminders. Accountability is a powerful weapon. Surround yourself with people who want to change the conversation around financial topics. It will go a long way.
Conversation starters are a fantastic way to start talking about financial topics. Ask questions to people you are comfortable with. Some of the best advice I have got about money came from me asking questions. I vividly remember a lunch I had with a dear friend. He had brought one of his friends along, and I really hit it off with the other gentleman. We got talking about retirement and investing, and I asked him about his experience. He was very candid with me about some huge mistakes he made. He gave me advice that day that I have never forgotten. Because he was willing to discuss a very sensitive topic, he gave me wisdom for a lifetime.
Teaching Kids About Money Requires Honest and Open Dialogue
If you struggle with money discussions, take heart! You are definitely not alone. It’s such a common situation in our society. It may cause frustration and embarrassment, but there is no reason for people to remain stuck. In order for our children to succeed, we need be serious about teaching kids about money. We are good at identifying problems in our society, but sometimes we struggle on how to fix them. The only way to help others is to lift the taboo around serious conversations about money is to go at it head-on.
My teaching places a ton of focus on the emotions around money. I think understanding the emotional aspect of money is just as important as the math. The Financial Muscle Academy is a great resource for anyone who wants to change their relationship with money. My mission is to help everyone I can achieve financial fitness for a lifetime. Open and honest dialogue about money improves our quality of life. You can avoid things like crippling debt and missed savings opportunity. Teaching kids about money will help improve the outlook for the future generations. Make it a priority in your life!