In order for your financial education roadmap to be most effective, it must be designed around a set of consistent financial values. First, you need to figure out what those financial values are, then you need to make sure your spouse – or whoever else is going to influence your child’s financial education – are in agreement.
Step 1: Identify Your Financial Values
When it comes to money, what values guide you? Do you believe in saving your money for retirement or living in the moment and spending it now? Do you believe in debt-free living? Are you against the use of credit cards? How much money do you aim to save every year? What do you consider an acceptable use of excess money?
There’s no judgment here—your values are your own—but it is important to know where you stand. Your financial values will touch almost every aspect of your life, spawning questions like those above as well as countless others. Having a defined view of how you feel about the way to use money will be instrumental in creating a foundation on which to build your child’s financial education roadmap.
Instead of sitting down with a legal pad and jotting down every money question that comes to mind, you can find great resources to help you think through your financial values. I especially like the worksheet that came with Raising Financially Fit Kids by Joline Godfrey. Godfrey created a “Family Money Values” chart that breaks down into the following categories: Earning, Spending, Investing, Saving, and Philanthropy. Each member of the family is invited to write how they think money should be used in those categories. While you might have some intuition as to your values, it is helpful to state them explicitly. I encourage you, your family, and especially your spouse to fill out Godfrey’s chart before moving on.
Step 2: Put Your Values in Action
Think about some of the major financial decisions you made in the past year. Maybe you bought a house, went on an expensive vacation, or dissolved a 401(k). How do each of those decisions align with your values? Use this as a litmus test for how well you execute on your values. If you say saving money is your first financial priority but you spent your annual bonus on a boat, you might need to either rewrite your value statements or reassess your financial choices.
Sticking to your financial values is especially important when you’re trying to teach them to someone else. Children are adept at spotting hypocrites. Even if you don’t mean to mislead them, you may still be sending them conflicting messages based on a disparity between your words and your actions. The irony is rarely lost on children when parents yell at them to stop yelling.
Keep your expectations of your child in line with your values. You can’t spend excessive amounts of money on entertainment and then criticize your child when she follows suit. Similarly, if all your clothes come from expensive trunk shows, you cannot give your child a clothing allowance and expect her to get all her clothes from the sale rack at a discount store. Of course this isn’t to say that you shouldn’t have nice things—it is your money and your choice. But don’t be surprised when your child mimics your actions and not your words.
Step 3: Get Everyone on the Same Page
Just as you want your own actions to be consistent with the financial values you espouse, you also want to eliminate confusing contradictions that come from other people in your child’s life. This starts at the very core of your family; as we saw earlier with Godfrey’s Family Money Values exercise, even spouses aren’t always on the same page financially. Maybe you love to make money and then recycle any earnings into real estate investments. Maybe your significant other wants to give any excess cash to charity. Maybe you prefer to rent a home, and your partner would like to own. These are important things to discuss if you want to create a roadmap for your child. Hopefully the exercise of writing down your values led to a more unified approach (even if it took compromise). The more aligned you can be in your financial values, at least as they apply to your designed curriculum, the better. Sending conflicting messages to your child about the value of money is only going to have negative effects.
Beyond you and your spouse, other people will influence your child’s financial education. The most notable example I hear is the grandparents who swing into town to spoil the grandchildren with gifts and candy and then leave before having to take responsibility for the emotional damage that has been done. I think that scenario is a bit cliché, but there’s some truth in it. If you and your spouse agree that you will only give your child one gift for their birthday but their grandparents send a box filled with twenty, you have a problem. In a more extreme example, if you raise your child with a carefully designed allowance and budget system only to have her receive a million-dollar trust fund from a grandparent when they are sixteen years old, you have a bigger problem.
Similarly, if you have a nanny or babysitter watching your child, explain the rules you’ve established about spending to that person. If you design an allowance that should not be spent on candy, make sure your babysitter does not allow it. Don’t be shy about discussing the financial values you want to teach your child with the other people who will financially impact their lives. If anything, you should use these people as a resource for your child’s financial education. Grandparents and sitters have opportunities to teach financial lessons that you might not have time for. But you can’t expect them to follow your lead if you don’t communicate your expectations to them.
Note that every financial situation is complex, with different issues for each income range and family dynamic. If you are still looking for more information, a good, very general source has been made available by North Dakota State University. Personalities and other seemingly unrelated factors may come into play here too, and it is important to recognize those variances. It’s another reason to sit down with all the key players and draft a set of financial values that’s tailored to your precise situation.