There is nothing quite so rewarding as being a father on Father’s Day. It’s the one day of the year where Dads are celebrated with new ties, handmade clay ashtrays, breakfast in bed, and the occasional “useful” gift like a new set of barbeque tools.
Our offspring look to us to provide guidance, direction, and advice as well as food, clothing, and shelter. What they don’t always get, are lessons around effective money management.
Like it or not, your children are absorbing everything you say and do when it comes to money. They know (often unconsciously) that there are money stresses at home. They know when it’s time to pay bills, when it’s time to write checks for baseball, gymnastics and swimming lessons, AND when you’ve spent more than your spouse would’ve liked on that new doohickey that you saw online.
What they don’t understand is how much certain things at home cost.
Growing up, did you ever have a sense of what the mortgage payment was? How about the car payment, insurance and gas every month? Do you have memories of checkout lines at the grocery store where the clerk asked for your parent’s social security number to write on the check?
If your parents were (or seemed) well-off, did you get an allowance for specific chores or just for being the wonderful person you are? Or did they bypass the allowance and just pay for anything and everything?
Money Savvy Dads are a different bunch. They use every teaching moment they can to form and shape their childrens’ financial habits. In essence, their children become savvy money managers, not by happenstance, but by design.
John D. Rockefeller was probably one of the first of the Money Savvy Dads. His children received an allowance each week of 25 cents. John D. gave each of them a double entry book-keeping journal and taught them to record every penny they gave, saved, spent and invested. At the end of each week, he asked to see the journals. If each penny wasn’t accounted for, no allowance was given the next week. As you might imagine, the children became very accustomed to accounting properly.
To this day, the Rockefeller family is one of the few that has retained and grown the family money while many other hyper-wealthy families squander what their tycoon relative had amassed.
Money Savvy Dads know and practice 3 behaviors that are central and paramount to raising Money Savvy kids.
First, they understand that their children will one day be adults who will have to fend for themselves. By preparing their youngsters for that day throughout their life, they end up raising adolescents, pre-teens and teenagers who understand ‘complicated’ ideas like delayed gratification, saving for something that’s desired, and investing for the long term.
Even young kids are required to have emergency savings accounts — not because of the fear of an emergency, but because it teaches a valuable lesson of putting money away for later use. Typically, a youngster with money in the bank is going to want to keep the money there instead of splurge on something they saw in the Sunday circulars.
Consider the opposite situation — a young adult with $3,000 in credit card debt is more likely to think, “I’m already in debt. What’s $500 more? I want the TV”.
Secondly, Money Savvy Dads practice the behavior of telling their children no and then give them a legitimate and honest reason as to why they are saying no.
“No you can’t have that!” comes off far differently than, “No, I’m not going to buy that for you because we are spending a considerable amount of money on a fun vacation next weekend. If you want to start saving for that, you’re welcome to.”
If the truth of the matter is the electric bill is due next week and you’re trying to figure out how to pay it, be candid with your children about the fact (without creating fear) and ask if they have any questions.
As a general rule, we tend to shelter our children from financial pressures or concerns because ‘they’re too young to understand’ or ‘we don’t want them to worry’. Fast forward a decade or two and you will probably have a young adult who struggles continuously with money because they never learned the hard lessons growing up.
Finally, Money Savvy Dads have their kids think entrepreneurially. The generation of workers that are approaching their twenties will be independent contractors, start-up entrepreneurs, and self-made wealthy. They will (most likely) have no social security to look forward to and instead will rely on what they are able to amass on their own for a secure and dignified retirement. By thinking like entrepreneurs, they’ll be far more prepared for that world of work.
By asking them questions like: “How would you make a thousand dollars this weekend if you had to?” they’ll begin to think of work differently. Talk to your children NOT about minimum wage, but about creating value doing something for your neighbors or your community. Talk to them about making $25-50 an hour or more and how they might go about doing that.
Let’s celebrate the Money Savvy Dads out there who are raising sophisticated consumers, informed investors, and savvy little savers. Their children will be the ones we read about in the pages of Inc., Entrepreneur, and Fast Company magazines. They will be the ones signing checks and paying for their Dad’s comfy retirements.