CMPS News Flash!!

Turning children into financially responsible adults has proven to be quite a challenge for many, if not most, parents. They don't know how to talk to their kids about money, and they don't realize they're laying down the foundation for their children's financial future whether they say anything or not.

To Give or Not to Give

If your kids are like most American kids, they want stuff. And, if you are like most American parents, you'd like to be able to give them that stuff.

But there's a catch. Giving a child all of the things he wants doesn't support his progress toward self-reliance, it doesn't build up an intrinsic sense of motivation, and it certainly doesn't help develop a strong work ethic.

It won't help him develop a deep-set belief that he can be, do, have and create whatever he wants in life, if he works for it.

Let's look at the opposite side of the giving equation.  Withholding most of what a child wants or making him work for some of the things he needs as a young child, can force him to be too responsible too soon. This scenario poses issues of its own.

A child who gets little from his parents growing up or has to work for most of the things he needs can often lose touch with childhood, being forced on many levels to become responsible sooner than is necessary and, although there is nothing wrong with learning to be fully responsible for oneself, there is something to be said for letting children be children. After all, most parents would readily exchange a few of their days toiling in the workplace for a few care-free days in the woods catching frogs or, more likely, running around the mall with friends or playing the latest video game on the neighbor's television.

Too Responsible Too Soon

Some children don't have an option. At an early age, they have to fend for themselves, struggle to get by or have to help their parents support the family. These children often grow up to be perfectly happy, healthy adults but sometimes they grow up resentful, angry and bitter. There is no perfect answer or solution.

The situation above doesn't include the child who, at the age of seven, starts a business and is making $1000 a month by the time he is ten! The child is internally motivated by a wonderful force and this is a great thing. Encourage him, help him learn, support him any way you can. For children who aren't intrinsically motivated at a young age, forcing them to be too responsible can often add to other stresses of growing up in today's society (too much testing, homework and extracurricular activities) and can cause very negative ramifications in terms of a child's behavior and choices later in life.

Finding Balance to Create a Financially Responsible Adult

A balance between these two, combined with your intention of giving your child a solid financial education, is what helps create an adult with a sound sense of financial responsibility. The question is, how do you, the parent or guardian, provide a solid foundation of financial education and instill a deep sense of financial responsibility in your children in a way that works for both of you?

Learn How Your Kids Learn Before You Teach Them About Money

Before we can answer this question and explore how to teach your children about money, we must look at how they learn in the first place. Since how they learn anything is how they learn everything, it only makes sense to teach them about money using their own personal learning style.

There are three very distinct learning styles that most human beings use to learn anything. Most people have a primary learning style but many use a combination of two or even all three to take in information and process it. Let's explore these three learning styles.

Have you ever noticed that you have to 'see' a map in order to understand the directions someone is giving you? Or, that you have to see a picture in order to understand how something goes together or how one thing is related to another? Do you have to be in the front during a workshop or class in order to see what the teacher is drawing on the board? Do you use words like see, look, notice and watch? This learning style is called Visual. You. You learn best by seeing and reading.

Or, do you have to close your eyes in order to 'hear' what is being said because too much visual stimulation interferes with your ability to take in and process new information? Do you often sit in the middle or in back at a seminar because you only need to listen to get the information? Do you use words like listen, hear and take in? This learning style is called Auditory. You learn best by hearing and talking.

Lastly, do you have to physically 'do' something in order to learn it? Do you stop and check in with your body to see how something feels before you decide whether or not you have learned it? Do you use words like feel, gut, body and sense? This learning style is called Kinesthetic. You learn best through a combination of movement and emotion related to the subject matter.

Again, most people rely on one primary style but many use a combination or two or even three to process new information.  It's a great idea to know and understand your child's learning style so not only can you teach him the way he learns best but you can help his teachers teach him better, as well.

Learning Styles and Financial Literacy

Now let's explore how your children are learning about money from you, whether you know it or not. Since there are three ways for them to learn, they are learning about money from you in three ways. They are learning by watching what you do with money, listening to what you say about money and experiencing what you are experiencing with money.

Looking in the Mirror

Albert Einstein once said, "Setting an example is not the main means of influencing another; it is the only means." He was right. Before you can teach your child anything about money, you must look at the example that you, the parent or guardian, are setting for him.

This means that before you start giving him an allowance, open savings and checking accounts, encourage them to start a little business, you must examine your own financial life to see what they are learning directly from you.

This is the most critical, and often painful part of teaching your child about money. You see, allowances are great, and wanting to empower your children financially is the greatest gift you can give them. If your own financial life is a mess, however, your children aren't going to learn the lessons of proper money management and wealth creation.

If you are living on credit cards, telling others how much you despise money, or you're constantly complaining about the rising cost of living, what is your child learning? He may be learning that life is hard and that having enough money is difficult. But it doesn't have to be this way.

It Takes Financially Savvy Role Models to Raise Financially Savvy Children

If you want your children to grow up financially savvy you must be willing to become financially savvy, yourself, if you aren't already. Most of us learned a long time ago that the 'do as I say, not as I do' form of parenting doesn't work. Teaching our children how to make, manage and multiply their money wisely falls into this category, just like everything else we want to teach them before they move out on their own.

So it's up to you. Before you attempt to teach your child about saving, investing in assets, using credit wisely, avoiding bad debt and donating to others, you need to be doing these things yourself.

Once you have this down, you are ready to begin instilling in your child the one life skill they absolutely must learn in order to live on their own successfully. You want them to be able to move out when they are ready and never have to move back and this means they must know how to make, manage and multiply their money wisely. They're ready when you're ready. Good luck!