Raising Financially Literate Children
Parents ensure their children learn about a variety of topics: history, language, math, sports, music. Shouldn’t money be part of the curriculum as well?
When Clint Greenleaf, YPO member and CEO of HomePlate Peanut Butter, sold his publishing company in 2011, he discovered he had enough money to help his three children, but not enough to support them through their entire lives. This made him realize that the best thing he, as a parent, could do for them was teach them about money.
Wanting to do a thorough job of it, Greenleaf read about 90 books on the topic, only to end up with disparate, often conflicting advice. Hoping to find a single, simple approach, he turned to fellow YPO members and asked them how they conducted their children’s financial education. Still no “silver bullet” solution presented itself.
Finally, Greenleaf developed his own, based on one unifying theme: give, save and spend. Over time, he has built on this theme through books and supporting materials to help parents teach their children some of the most important lessons of their lives: how to save, make and share money. Here are three things he has learned along the way.
When Greenleaf talks to people about starting their children’s financial education, they often respond with, “They are kids, they should be out playing and having fun. There is plenty of time for them to worry about money later.” Or, they may admit the importance of financial discussions with children, but claim not to have the time or expertise to do so.
However, children are already getting money lessons — from other children, teachers, other adults, the internet, newspapers, television, movies and books. Isn’t it better for them to learn from their parents?
Greenleaf suggests an approach created by fellow YPO member Neal Godfrey to start teaching young children — a car game. When the car passes a billboard, ask questions such as: The item shown on the billboard — is that a need or a want? What do you think the ad is trying to do? What are they trying to get you to buy? These questions and answers can lead to a natural and fun conversation about money.
Have a plan
On his website, Greenleaf offers a worksheet that he urges parents to set aside time to complete together. The worksheet asks parents to examine topics such as their beliefs about money and work, their own financial literacy, and their feelings about their children working. Developing shared responses gives parents a good start on a plan for their children’s financial education.
Many parents doubt their qualifications to teach their children about money. This is understandable, says Greenleaf, but adds, “It is not your job to be the only teacher in your kids’ lives, but it is your job to ensure they get the information they need. If it’s not you, find someone who can do it.”
He believes the point of planning is to give children a chance to fail on a very small scale, in a safe environment. It is better for them to learn a painful lesson under your roof based on a USD10 loan from a sibling than in their first year of college after they have run up USD20,000 of credit card debt. Allow children to make mistakes, but tie those mistakes to real-world consequences.
He points to Kiva as a great site to teach children about giving. Kiva organizes microloans, so the required investment is reasonable and children can be involved in the selection of what to fund based on their interests, geographic area, family history, gender and other factors.
Greenleaf teaches his children about taxation in a very direct way that children can immediately understand: he eats 30 percent of their dessert. He then follows up with an explanation of the analogy to taxes and income.
Adapt your plan
Life circumstances change, so plans need to change with them. Divorce, marriage or remarriage, new children in the family, the death of grandparents and possible inheritance, business exits, and bankruptcy can affect the family’s financial picture and raise new lessons to be learned. Remember that children will learn from what their parents do as much as, if not more than, what they say. Be sure your own reactions to these events reflect what you want to instill in your children.