How Not to Raise a "Money Moron"
I'm obsessed with personal finance shows; I blame it on being irredeemably curious (which is to say, nosy) about other people's money habits. Some of my favourite shows are hosted by Gail Vaz Oxlade - no one tells it straight like Gail. Although I've been watching - and taking notes - for a long time, it wasn't until recently that I started having a new perspective on the not-so-money-savvy folks featured on these shows. Nowadays, as a new parent watching "princess" after "princess" (male and female) parade across my screen, my main thought is: how do I make sure that my kid won't grow up to be one of these "money morons"?
And it's not an idle question. I think we can all agree that money morons are made, not born, that way. For some, parental indulgence may have crossed the line from benign to bad influence. For others, it may have been parental example that was the problem. Either way, we parents don't get off scott free when our kids turn out to be in dire need of a financial intervention. Rather than deal with the consequences (and the guilt) 20 years down the line, I'd rather be proactive. So, just how does one go about not raising a money moron?
I like to think that my parents managed this task quite well (if I do say so myself), so I'll be taking a few pages from their parenting handbook.
Talking About Money with Kids
Money never just materialized out of thin air in my parents' house. I always knew that it was earned, and that hard work was involved. I don't remember having sit-down talks with my parents on the topic of money, but it was also not a taboo subject. My parents did not refrain from speaking about their money - the good and the bad - around me. Which is not to say that they burdened me with their financial goals or worries - they simply didn't make money a mystery. By the time I was an adult, I have a pretty good idea of the financial planning that goes into running a household, without ever having had a proper "sit-down" talk (or formal classroom lesson) from anyone.
The Importance of Living Within Your Means
Champagne tastes on a beer budget are not uncommon. What I learned from an early age was that I had a choice: I could either learn to like beer, or find a way to make champagne money. My parents have never been buy-now-pay-later people. As immigrants to Canada, we had some lean times in the beginning, which included things like sleeping on air matresses, getting around without a vehicle, and never eating out. It might have been tempting to live like the Joneses, but my parents always emphasized the security that comes from living within your means - you might not have a lot, but at least you can call it your own. As stressful as it might have been at times to make ends meet on minimum wage salaries, our family never had to contend with overdue bills, the calls of debt collectors, or worse.
Save Money, Spend Money
My parents were frugal when their budget called for it, but rarely just for the sake of it. And while they emphasized the importance of saving up for a rainy day and retirement, they also showed me that it's okay to spend money on things that are important to you and improve your quality of life in measurable ways. Saving and responsible spending are two sides of the same coin; you need to have the hang of both to have a balanced financial picture.
As a general life lesson, my parents stressed the importance of making informed decisions. This means knowing where and how to go about finding the information you need to make a decision, financial or otherwise, rather than relying on what other people tell you. It's common to hear folks moan about the lack of financial literacy on the part of Canadians; the complaint is not without merit - you need look no further than my favourite personal finance shows. With that said, there are also many resources out there for anyone who wants to become more informed - from blogs, like this one, to government and non-profit websites, to self-help books. The key is taking the initiative to look for the information in the first place. My parents are not professional financial advisors; they didn't teach me the nitty-gritty about things like RRSPs, TFSAs, or mortgages. They just made sure that I knew to look before I jumped.
What tips do you have for not raising a "money moron"?