Today, I’d like to introduce you to Derek Olsen, author of The Four Week Financial Turnaround. He’s guest posting on the site today on very important topic…. MONEY.
My wife, Carrie, looked at me like I was crazy when I told her that my parents were making the five hour trip from Oklahoma City to Kansas City and then heading back the same day. Even for my parents, who are the king and queen of “not overstaying their welcome,” this was a quick trip. But I think the part that weirded my wife out the most was the reason that they were making the trip. My dad wanted to spend ten hours of his day driving the flat, cow-riddled highway all the way through Kansas in order to spend one hour giving me, my wife, my brother, and his wife – wait for it – a lecture on finances.
To be honest, I didn’t think twice about this. Why wouldn’t my dad want to give us a finance lecture?
That’s the kind of thing that parents talk to their kids about, right?
My wife quickly informed me that it is not. While my biggest financial concern growing up was which fund my parents were going to pick for the investments that they started for me, my wife was literally working to try to keep the electricity on. Money conversations in my house revolved around saving money, spending less than you earn, and investing. Money conversations in her house were nonexistent.
Carrie grew up in a single-parent household. Her mom wasn’t taught anything about money from her parents, and so she taught Carrie and her siblings nothing about money. Carrie learned about money from experience – a lot of experience. When she was 21 years old, she bought a house for her family so that they wouldn’t have to rent anymore. She got a bum deal on the loan, couldn’t afford it, and came uncomfortably close to having to foreclose.
Carrie and I are doing great now. We don’t have any kids yet, but the differences in the way that our respective families handled the issue of finance education has caused us to make a few rules for how we plan to talk to our kids about money. Below are a few of the things that we decided are a good idea for all parents – especially ones living on only one income.
1) We will talk to our kids about money!
Don’t make finances a taboo subject. If you don’t explicitly teach your kids about money, they’ll come to their own conclusions – largely by watching you. So if they see you swiping a credit card, but never learn where the money on the card comes from, they may find themselves in debt before they reach age 19!
2) We will let our kids manage an age-appropriate amount of money (or Legos or goldfish crackers – anything to teach them about the principles of economics).
With your oversight, let your children decide how to spend whatever currency you decide to let them manage. You can do this from a very young age. Talk to them about things that they can buy with their money, and illustrate how saving money gives them even more options to do fun, important and responsible things.
3) We will teach our kids that going without sometimes isn’t so bad.
It’s always shocking to me when I get a coaching client who is struggling to pay their rent, but their cable bill is current. Carrie told me that in her house growing up, it was important to pay the cable bill so that her younger siblings wouldn’t catch on that they were having money struggles. She knows now, that it would have been wiser for her to sit her siblings down in the living room, explain to them that it’s a good idea to be responsible with money and take care of essential expenses first, so they were going to cancel cable for a few months. It could have been a great time for her family to come together, learn some valuable lessons about money management, and come up with some fun new entertainment ideas in the process. Or perhaps even earn a few extra dollars!
Now, I know everyone has grand ideas about parenting before they have children. But we figure our list of idealistic parenting principles is pretty small, so I think our chances are decent at actually carrying them out (we’ll give it our best anyway!).
Let us know what methods you have used to teach your children about the importance of money management.
Two lucky commenters will win a free copy of my new book The Four Week Financial Turnaround. (Go ahead and buy the book if you wish, winners who have already bought the book will receive a $20 Amazon gift card!)
This guest blog post is part of the virtual book tour for the book The Four Week Financial Turnaround. Special bonus products included with purchase during launch week only, Nov 26 – Dec 2nd 2012. Bonus products available all the time too!