Teaching our children about wealth is one of the most incredible hacks to building generational wealth.
Ironically, as important as money is, it is rarely discussed in homes. Often Children grow up to view money as a Boogeyman.
Both in its absence leading to hunger and tension in the home, to its abundance leading to luxury, children live with a consciousness that money is significant yet have no idea what it is.
So, should you talk about money to your kids?
This can be a tricky question to answer. Telling a financially illiterate parent to talk to his children about money might lock the entire family in transgenerational poverty.
No story proves this point better than the premise of the story of the best-selling book Rich Dad and Poor Dad by Robert Kiyosaki. His story illustrates the mindset of two parents, one extremely rich and the other poor, and how Robert Kiyosaki as a child, came to see the difference in these mindsets and the struggle to submit to one.
A teacher's knowledge is what a student feeds off. So, the decision to speak about money to your kids mainly depends on “the quality of information” you have about money.
Here I like to narrate a real story about a rich person and how he talks about money to his children;
I was fortunate to meet with an established businessman who had built a business with revenue north of 20 million dollars. In one of our many meetings, he got a call from his wife. She informed him about her decision to purchase a phone worth 50000 rs for their youngest son.
The child had just gotten back home from boarding school. He needed a phone for online classes as his short vacation at home coincided with the Covid 19 restrictions. Surprisingly, the businessman said “NO” to his wife’s request.
I started a conversation with this fantastic businessman to understand how he teaches his children financial prudence, and he was willing to share his unique method with me.
He told me he never bought anything at the whim of his children, irrespective of how essential the item might be. He instead gives them the responsibility of explaining to him why such a purchase is essential. In this case, he asked his son to make a bar chart to describe why the 5,0000 rs phone was better than cheaper ones. If he gets a solid response from his kid that satisfies him, he will make the purchase.
Of course, his children often make a fuss about their need to defend their demands from him constantly, but he never bulges. This is a great way to teach kids the importance of thinking deeply before spending, a trait that will help them make wise buying decisions.
However, a parent who needs to learn to budget and prioritize cannot teach their children. This same goes for knowledge of managing personal finance and investing. Unless a parent is not well-read and practiced in these matters, they would surely mislead their children. And herein lies why many parents do not discuss money with their children. They are fully aware that their financial life is in ruin- resulting from poor financial knowledge. And so, they feel unequipped and would rather not speak about money.
Therefore talking to your children about money is extremely important- but only if you understand money.
Do you have all the proper knowledge about finance, and do you live by this knowledge?
If yes, then you must train your children accordingly. But if you lack sound financial knowledge, you must equip yourself before your talk and teach your children about money.
What do you think about it? Is it good talking to your children about money? How do you manage their money demands? Please share it in comments.