As a personal finance consultant, I also teach money management workshops for teenagers and college students, as well as for young or soon-to-be parents.
Many of them worry about how to raise kids who won’t take their family’s hard-earned money for granted. They want to instill values of generosity, hard work, thoughtfulness and compassion.
When clients ask me about this, my initial answer is that if you’re asking the question, that’s a good start. But there’s much more to say about raising children who are grounded with money.
1. Just because you can doesn’t mean you should
We all know people who have a lot of money and live a very rich life in material goods: big houses, fancy things. Parents who grew up with less often want to make sure their children have the best of everything, but that can backfire.
Just because you can afford for the family to travel first class or book the most expensive accommodations doesn’t mean it’s always the best decision. If you want to raise grounded children, display grounded values. It doesn’t make sense to spend money on things that aren’t important to you just because you have it available. And your kids will notice if you do.
At the same time, you don’t need to live a live with unnecessary deprivation just because you’re trying to convey a message. The key is to strive for that middle path and always return to your values.
2. Show what it means to be a good neighbor
Having money shouldn’t absolve your kids of their obligations to their community. You might help them get summer jobs or direct them to shovel the neighbor’s driveway after a snowfall, to show them all the ways we need and help each other in a community.
I know for sure that your kids will remember what you do much more than what you say. If community involvement matters to your family, are you showing what that looks like? If you support environmental causes, are your choices aligned with the causes you support?
3. Teach them to read the room
Another important lesson to teach your kids is how to keep from accidentally showing off. Kids understand gradations of class and wealth better than anyone else.
Make sure to positively reinforce any sensitivity they show in social settings. Being respectful of your audience is a life skill just like any other. Teach them about status symbols: visible brand names, expensive fads, and even over-the-top generosity that may not have intrinsic value.
Help them think through what pursuing those symbols will mean for their relationships. If they want the latest status coat, ask them: “If we get you that coat, how will other people react? How will they feel?” Help them see when indulgence or ostentation may make someone else feel less than, which can strain relationships.
4. Uncouple money and morals
Kids are obsessed with the “why” in everything, including money matters. Once your children notice that different people or families have more or less money, they’ll start to ask you about it. Your job is to examine and deconstruct any assumptions they’re making about why someone might have less money than you do, especially having to do with laziness or morality.
Guide them through other possible explanations for why someone else might have less. Maybe your family has inherited wealth and this person doesn’t; maybe this person prioritized a career they love but is less lucrative; maybe this person got different money messages growing up.
Point out that your kids are probably not going to be the richest or poorest in the room wherever they go — would they want someone wealthier to judge them for having less?
Most important of all, emphasize that greater wealth is never a measure of character or values.
Sheila Schroeder is the author of “It’s Time to Talk: A Woman’s Guide to Navigating Money Conversations” and a business development consultant at Wealthspire Advisors. She brings more than 25 years of financial services experience and regularly leads personal finance workshops.
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