Why You Should Teach Kids About Money (And Giving)
I remember when I graduated high school, we had a requirement to complete 25 hours of "community service" in order to be given a diploma. As a typical rebellious teenager, I rolled my eyes at this dubious requirement from authority.
I didn't have a huge issue with it, because most teens know that colleges see that as a plus when considering admissions. Also, it was so easy to have someone sign off on it saying you helped them at the bake sale for 6 hours (not gonna rat out who did that, we all made poor choices, blame senioritis!)
Years later, after college and while living on my own, I realized volunteering wasn't just a great way to meet new people, you also learned a ton from the work you were doing, and the people you interacted with, and felt a strong sense of purpose that you were giving your time for the greater good of a cause.
Plus, many times when working events, you got free access and freebies as perks.
I wasn't directly taught about volunteering or money. Like many, I just saw what my social circle did. And most of us at that age just care about having fun and making others wish they were like us.
Childhood Experiences Matter
When I volunteered for various organizations like Volunteers for Outdoor Colorado and The Nature Conservancy, I was impressed to see how many parents were there with their kids.
Some brought their teenagers (possibly to complete some graduation requirement) but others also brought younger children, possibly as young as 5 or 6. Some even brought their little kiddos in those cargo bikes like this one! Talk about parenting goals.
Teaching Kids About Money
So what does exposing kids to philanthropy early in life have to do with money? Well, habits of course.
While I may not have scientific evidence of this, the majority of the parents I've spoken to of well-rounded kids have explained that by teaching their kids giving must be a part of their budget, they are less likely to spend on harmful or frivolous purchases and form better habits around budgeting, saving, and goal-based planning.
Many parents already teach their kids about money when they introduce that right-of-passage income program known as an "allowance". I never got an allowance, probably because my parents are Indian and always said the roof over my head was the allowance I got for doing chores.
Anyway, I had friends who got an allowance just so their parents wouldn't have to listen to them whining about wanting to go to the movies. Yet I also had friends who were given them for output-based results.
Whether it was maintaining a high GPA, completing weekly chores, or making sure their little siblings got their homework done, parents came up with ways to compensate their offspring for listening to them, thus creating a system for which kids start to form their money habits.
A clenched fist cannot receive
In Financial Fives, I discuss how my upbringing and who I went to school with sparked my fascination with personal finance. I had to find out how those kids who drove $50,000 cars to high school were able to afford it and was convinced that money made life easier.
If we teach our kids about money, about giving, and about what proper financial decision-making looks like, it sets the foundation for a lifetime of a healthy relationship with money.
I went to school with people whose parents fought about money or didn't have much, and they were the ones who leaned on credit card debt and had a negative or toxic relationship with money.
The ones who were fortunate to get some form of personal finance education, whether through family, their econ teacher, or a program like Junior Achievement, ended up being aware that time is their greatest asset.
They were diligent about saving and investing, cautious about debt, and only took on student loans if they knew there was a promising way to come out ahead financially even after paying them off.
Another plus to teaching kids about money is you nurture a relationship as a confidant when it comes to money questions they may not feel comfortable turning to their friends for.
Money as a Tool and not as the Goal
As I mention above, many of the parents who taught their kids the value of money are the ones I would see at the volunteer events I attended, be it river cleanups, trail construction, or garden planting.
They consistently remind their children that they have enough, so they should use their comfort and time to improve the world around them.
These people are grateful for their local greenways, parks, and bike trails, so they feel as if they are paying their dues by helping keep those public places healthy and vibrant for all to enjoy.
Someone who was raised thinking it's all about money or image, or that they pay enough in taxes so that they shouldn't have to volunteer, are less likely to see the role they can play in improving their communities.
In grade school, teaching kids about money can help them understand that new shoes or a flashy new backpack isn't as easy as just two clicks online and it appears at the front door (the supply chain discussion is a whole other story).
Then, taking them to the food bank or children's shelter can spark a mindset that there are others less fortunate than them, and the reality is that it's closer than they think.
Time and time again I see young adults who were given some level of financial guidance early in life succeed in life's inevitable dilemmas.
From negotiating pay, selecting the right benefits, properly preparing for a home purchase, and not going into debt for a wedding, these lessons pay off now and when they have a family of their own.
Listen to or read many of the noteworthy millionnaire interviews and you'll see there is some level of a connection between the millionnaire interviewees and one or both of their parent's financial acumen.
You don't have to teach them about FIRE unless they are interested, you just want to teach them the fundamentals that can lead to a FIRE. For example, I talk to younger cousins/kids of friends about what makes debt such a slippery slope, especially when they are feeling peer pressure to keep up a certain image.
Nurturing a healthy relationship with money, leveraging it as an important tool, and not romanticizing it as a cure-all, will lead to a better world for all of us.
Less focus on consumerism, more focus on minimalism, and foundational stability means more people will have time and attention to focus more on things that matter, like relationships, civic activism, community involvement, philanthropy, and acquiring fulfilling new skills!