Teach Kids Money Series: The Importance of Finding Teachable Money Moments with Laurel Makowem
“Each day of our lives we make deposits in the memory banks of our children.”
This post in our Teach Kids Money Series comes from Laurel of Mothers Teaching Money. She suggests being open to teachable money moments and being prepared to share a lesson when the opportunity comes. Check out the video of her son explaining assets vs. liabilities.
Why is it important to teach basic financial literacy to kids?
I see financial literacy as a collection of skills and mindsets which when learned and practiced often enough become habits. A child is not born financially literate, they are raised by us their parents, families, communities and schools. If we don’t intentionally teach our children how to manage and grow money, there’s a good chance they may have a life filled with financial stress and pressure. There are not many of us parents who wish this for our precious children. Pre my financial education journey, the extent of my financial education was knowing how to spend everything I earned, and I mastered living paycheck to paycheck. I remember feeling really chuffed with myself when, as a young working woman fresh out of university, I received a letter from my bank presenting me with a credit card with a ridiculously high limit. My natural saving personality and fear of getting into trouble from my mom kept me well below that limit but it could have been the beginning of a long scary debt road for me.
Lucky for me I married a man in finance. I didn’t realise it at the time, but I subconsciously just handed over the reins of my financial life to him because I felt inadequate and incapable (and foolish and unintelligent). I now know this was driven by the very powerful money beliefs I held about myself, which I had learnt growing up.
When we make a conscious decision to teach our children a growth and abundance money mindset and give them plenty of opportunities to learn, practice and fail, we are setting them up with a solid financial foundation from which to leap into their lives and make more good than bad financial decisions.
Many parents do not feel confident talking about money, let alone teach money topics. What advice/tips do you have for parents to start the money conversation?
I think it’s so important to be honest with your child about where you’re at when it comes to your own relationship with money. If you’re a bit of a financial mess, tell them. Explain that you didn’t learn how to be good with money as a child and you’ve made some bad decisions but you want to change that and learn how to be good with money so you can teach them. Be honest with yourself about your current financial behaviours and situation. Take small steps and be prepared to fail and fall often but know that you will get back up each time.
If you don’t budget, start!!! Include your child in family budget decisions and show them the difference between wants and needs.
If you can’t answer your child’s questions or get stuck explaining a financial concept to them, tell them you don’t know and will find out and get back to them ASAP. And most important is to make sure you follow through on that commitment.
Be consistent and practice what you preach. Research show our children learn mostly from observing and watching how we are with our money.
I was hopeless at pocket money. I was inconsistent, always late with the cash and took more money out of my son’s piggy bank than I think went in. I figured out why and it was because I had no idea what lessons I was trying to teach him about money and I certainly wasn’t practicing the save, spend, give system I was preaching. How could I expect my young child to do it if I wasn’t?
Choose how you speak about money in general and money and yourself. Words and the tones behind them are so powerful and science tells us can leave lasting non-factual impressions on a young brain.
If you aren’t an active saver, become one today so you can show your child this incredibly powerful mindset and behaviour. My motto is ‘just start’.
Most important is to keep it fun, simple, age-appropriate and try and teach them in a language and a world they understand. Listen to what they say and take your cues from them. If they look bored or get that glassy eyed look us parents know only too well, end the lesson or the conversation and/or find another way to engage them in the learning.
Many parents are struggling to juggle work, kids, etc. while home. How can parents incorporate teaching financial basics seamlessly into their daily lives?
Involve children in the family’s financial decisions, activities and conversations. Encourage (not force) them to participate. Let them give their suggestions and opinions. Listen carefully and respectfully.
The best way to learn how to manage and grow money is to practice managing and growing money. Give them an allowance not tied to chores. Clearly explain the purpose of the money – it is a learning tool only. Create opportunities for them to earn more if they so desire.
Involve children in budgeting, planning and saving for holidays, celebrations and birthdays.
Have family saving challenges.
Use current events to talk about philanthropy. Find your children’s passions and help them find ways to contribute.
Let them choose their chores (no pay) and their jobs (pay).
Encourage negotiation.
Talk often about needs and wants.
Draw their attention to adverts and sales. If we think how many adverts and subtle messages our children hear every day telling them to buy, it’s frightening. Talk about it.
When you get take-aways, chat about how much it costs to make the food, pay the staff, rent or buy the premises.
What is a landlord? How do you become a landlord? What does it cost?
Invest for them if you can and involve them in the process. If this is not possible for your family right now find simulated investing experiences online.
When you are out and about have conversations about how much houses and cars cost. Ask questions like do you think the person who lives in that house is rich? Why? This is a good opportunity to introduce financial concepts like assets, liabilities, debt, loans, mortgages and interest rates.
There are literally hundreds of teaching moments every day that are brand new but often confusing for children. The parent is already occupied with the ‘moment’ so it won’t take any extra time to turn it into a financial lesson.
Teach Kids Money Series: The Importance of Finding Teachable Money Moments with Laurel Makowem
Do you recommend any tools to help parents in this process?
There are many incredible ideas in the financial education space. I believe our resources are unique in that they offer parents everything they need to feel confident and capable to role model good money management to their children, even if they don’t feel that way YET.
The resources are designed for children but act as a step by step financial education process for parents to follow. If needed, the parent can learn alongside their child.
Our aim is to make our resources accessible and affordable to everyone.
The learning experience must be age appropriate, fun and in the language children understand.
To sign up for free resources and stay in the loop about 3 exciting new products we are developing in conjunction with creatives and educators, join our mailing list.
Go to our website for more information on our workshops.
For parents wanting to work on their own relationship with money and surround themselves with like-minded individuals. We have a great conversation going on Instagram.
We have some fun videos on YouTube featuring my son as an 8 and 9 year old Dollar Dan. He is now nearly 16 and if he had his way Dollar Dan would be deleted forever!! A few years back, we were in the process of negotiating a business deal but his mates discovered Dollar Dan and that was the end of that!. Here is the link to one of our first videos on Assets and Liabilities.
A Note for Sisters for FI
Thank you to Laurel for sharing these wonderful insights and tips.
We hope you’ll leave here with one or two action items to try.
Please let us know in the comments a recent teachable money moment you’ve had with your kids.
Teach Kids Money Series: The Importance of Finding Teachable Money Moments with Laurel Makowem
