She Strengthens

Raising Financially Savvy Kids: A Parent’s Guide

As I sat in the yard on a sunny summer afternoon, my five-year-old son suddenly asked me, “Dad, what is money?” His question caught me off guard, and I was taken aback. I’ve used money, earned it, spent it, saved it, found it, and lost it, but how do I explain it to a child?

The Fear of Raising Financially Illiterate Kids

As a parent, I’ve often worried about passing on my financial mistakes to my children. I envision them struggling with debt, overspending, and financial insecurity. This fear is common among parents, and it’s what I call the “Good Parent Curse.” We’re more aware of our mistakes than our successes when it comes to raising our kids.

Buying Time to Answer the Question

I stalled for a few minutes, asking my son why he wanted to know about money. But he simply replied, “I just wanna know.” Kids at his age are curious and determined to get answers. I realized I had to come up with a response that would set him on the right path.

Defining Money for a Five-Year-Old

Do I tell him that money is what people use to buy things? That’s true, but it might lead him to believe that material possessions equal happiness. Or do I say that money is something you work for? That’s also true, but it might tie him to a life of working solely for financial gain. I wanted to instill in him a different perspective – that you work for fulfillment and satisfaction, not just money.

Teaching Money as a Skill

After a few moments of contemplation, I told my son, “Money is something you can use to buy things, you can save it, and it’s very important. It’s a skill that you need to learn.” He looked puzzled, so I added, “Just like skating or walking, no one is born knowing about money – it’s something you have to learn.” I wanted him to understand that money is a tool, not the end goal.

The Importance of Happiness

I felt compelled to add one more crucial point: “As important as money is in life, it’s not the most important thing. Happiness is.” I explained that having a lot of money doesn’t guarantee happiness, and not having enough money can lead to worry and unhappiness. I encouraged him to focus on happiness, and I would help him learn about money.

Starting Early with Financial Literacy

My son asked how he could become good with money, and I told him that the only way to get good with money is to start handling it. I decided it was time for him and his sister to start earning an allowance, marking the beginning of their financial education.

As parents, it’s essential to teach our kids about money management, but it’s equally important to instill in them a sense of fulfillment and happiness. By starting early and setting the right tone, we can raise financially savvy kids who understand the value of money and the importance of happiness.