I believe that money management is partially related to personality and analytical thinking skills, and the other to values that are instilled in you at a very very early age. Not everyone posesses them to the same degree. Some people who are quite bright never learn, even though they have the capacity. Money management is just not their fortay. They might be brilliant in splicing DNA, but not in managing money. Its not to say you can’t be taught those skills, its just going to be harder and take longer to stick. I don’t think you can wait until their in junior high, HS or college to teach them about money. Their values and opinions get formed much early on. Sure we can teach them at that age to reinforce what they already know, but I think it needs to start much younger.
Much of how you approach finances is what you learn from your parents – either you want to emulate or you want to be nothing like them as other posters have mentioned.
My father was terrible at money management and even after financial ruin, I don’t think he’s quite learned his lesson. The kicker is that my father was a mathematics and accounting major. Some people live in the now and enjoy what they can. They don’t really understand delayed gratification for a larger cause. My father no matter how much education or explaining you do for him, he will never be able to strategize on managing money. My father didn’t grow up with a lot of money. They were very middle class. My mother on the other hand grew up with a lot of money. Neither of them were taught about managing money. My father is a spender, my mother is a saver. What’s the diference if neither of them were taught?
Hence why I think its partially personality. My sibling is someone who’s a lot like my father. Didn’t believe in large part in delayed gratification. She’s Target rich. She goes into Target to buy toilet paper, but comes out buying $200 worth of knick knacks. She’ll surely tire of these home decorations, or whatever else she bought in a year or 2. Rinse and repeat. She always wondered how I had more money than she did even though I was younger. She still wonders to this day.
I grew up watching my parents fight about money. I opened my first savings account in 4th grade with my father on the account. I managed to save $3000+ by the time I was 12. Every time I got money for my birthday or holidays, I banked it. Sadly, my father needed the money so he drained my account. That was a harsh lesson. I realized NEVER to rely on anyone for your financial independence because reality was, I couldn’t. While I was probably scarred by the behaviour, I knew I was going to have to take care of myself. My sister never had any money as a kid, in college, or many many years out of college. She thought I was a superficial bitch because I was very focused on my career and always negotiated my salary. I couldn’t fathom why anyone wouldn’t negotiate a salary. It wasnt until her later years when she finally realized no one was going to come in and take care of her financially. If she wanted a house, she was going to have to buy it for herself. The moral of the story, I think you learn these things early on, either by parents who lead by example or conversely what not to do. The rest is left up to personality as my sister and I did very divergent things most of our lives and still have very different approaches to money.
I hear friends talk about how their kids will only eat pizza or mac & cheese. I think its the parent’s role to determine what’s best for a child. A 5 year old shouldn’t be given a choice on what to eat. They don’t get to choose that they want to eat pizza every day. Eventually, a kid will choose to eat what you put in front of them whether they like it or not. Likewise, kids shouldn’t believe they have a choice in how much you’re going to spend on jeans because they badger you or negotiate. My sister learned from an early age that if she cried enough and threw enough fits, my father would buy her the toys. My mother once made them leave a toy store, only for my father to sneak back there and get it for my sister. What lessons do you think that taught her? If kids are taught they have choices or can negotiate how much they get, they always will ask for more. I’m not saying you shouldn’t teach your kids to make choices for themselves. I’m just saying you can’t buckle to the pressure or badgering. Kids are like dogs, they smell weakness.
Just because I have the money now to buy nice things, doesn’t mean I do. My money is allocated towards other purposes. I think kids should be taught that. “No Suzie, we don’t have the money to buy you a Beamer”. Technically perhaps the money is there, but in reality, the money has been “allocated” towards retirement or their college fund. There is no negotiation. I think parents these days want to be their kids friends which leads to caving in.
Otherwise, I have many friends who believe in spending everything they make and are very materially focused. They indulge constantly. If your kids see you buying all of the latest and greatest, why would they know the difference? It becomes the norm.
