Teaching Kids About Money: Protection and Possibility
Taking a road safety approach to financial education, including both protection and possibility, will help young people avoid financial accidents whilst being empowered to make life choices that will leave them happier and fulfilled.
Most people would agree that teaching children to safely cross the street is an essential life skill. We want to keep them safe from harm and avoid accidents. As children grow up and progress from scooters, to boards, bikes and so on, the safety principles they practiced from a young age will hopefully stay with them. There is also a secondary benefit to road safety, which is the gradual building of a child's confidence and independence. How far could they get in life if for example, they lacked the courage or permission to cross roads? A child would only ever experience living in their immediate neighborhood and never progress to the opportunities in the wider world beyond.
Protection
Both of these principles can be applied to teaching children and young people about money. Consider the safety element as future protection which will enable kids to make sensible, well-informed financial decisions and avoid painful, expensive mistakes. Examples include running up large consumer debt, or succumbing to the 'want it now' appeal of payday lenders. These are money accidents waiting to happen. In an ever complicated financial world, the easy availability of credit for young people and the lure of glossy, mass media advertising can be a big temptation to the unaware.
Possibility
The second major benefit, increasing independence, is also equally valid when applied to financial education. When has anyone, ever, spoken to your child about wealth creation for example? Increasing your child's Money IQ will help plant seeds of opportunity and encourage them to think about what they want their lives to look like. This may in turn impact on career choices, attitudes to education and other key life decisions. Give young people access to ideas, influences and strategies to make money, combined with the know how to create a plan towards financial independence and the result can be very liberating in terms of how they decide to spend their working lives.
Actions
If you are a parent, think back to helping your child to cross the street; you will at some point have modelled good behavior. Stopping at the curb, only crossing at the lights, holding their hand for reassurance and so on. We know that young children also pick up their financial habits and beliefs from early influences, which in the main means you. Speaking in hushed tones around money will lead to a belief that it is not something to be discussed. Arguing over bills and missed payment may lead to stressful associations and even a desire avoid money responsibilities later in life.
One quick tip is to become more aware of your language, actions and attitudes towards money. Are these things that you wish your child to inherit from you? A more open and positive relationship with money will be developed by a child who gets a balanced picture that financial awareness can lead to both protection and possibility.
