Over the last 3 years, I have focused on helping the next generation grow up to be financially healthy and wealthy. What I’m also discovering is that my work is also having a positive impact on the financial well-being of parents. In this blog, I go through 3 ways in which teaching your kids about money could also help you become wealthier (I used ‘Rich’ in the title as it draws more attention but I mean wealthier. If you are uncertain of the difference please see my blog Rich Kids vs Wealthy Kids after reading this blog).
3 Ways teaching kids about money makes you wealthier:
ONE: Being a good money role model
As you start talking to your kids about money, I hope that it gets you thinking about how to manage your own money.
Remember, that our kids are observing our actions and listening to our words. Therefore, if you want your kids to start taking the right money actions then you must show them that you too are taking the correct ones. When I first started Blue Tree Savings, someone very close to me asked me about how I set up an investment account for my kids as they now want to start investing for their kids. I told them how I simply went to the Vanguard website, opened an account and set up a monthly payment into one of their global equity funds (you can learn more here). It turns out that they got off the phone and set up an account that morning. The best thing was that as they were setting up an account for their kids, they also set up an account for themselves. Despite not saving or investing for nearly 40 years, this person used their kids as a motivation to start saving for themselves and becoming wealthier over the long term as a result.
TWO: Seeking help from others
Money is such a taboo topic. Even with our closest friends, we might talk about strange illnesses, personal relationships, fertility issues and so on but talking about money seems to be off-limits. The taboo nature is due to the perception that money is linked to ‘status’ and we don’t want to reveal that there might be a difference between the ‘status’ we display compared to the money we have (in many cases, people overplay their status by using debt to buy clothes, cars and houses which are not quite in line with how much money they have).
The taboo nature of money means people are afraid to seek help which is a big problem. There are so many people struggling in silence when it comes to money. By focusing the money conversation on kids, it provides a way to talk about money without the worry about ‘status’. This was particularly evident when I was talking to a company following one of the workshops I was doing for their employees. The person in charge of running workshops told me that my ‘How to teach your kids workshop’ was attended by a much higher number of employees than their previous workshop with another company on ‘How to manage debt’. They asked a few people why this was the case and they said they didn’t want to be seen to be attending a course about ‘debt’ as people would know they were in debt (which is worrying).
They jokingly said they should have changed the title to ‘How to teach your kids about debt’ so that more people would attend. Whilst they said that in a slightly jokey manner, I wouldn’t be surprised if it would work as it’s not focused on the person directly and they would be seen as good guardians who want to help kids (even for people who aren’t parents as most people have relations who are kids). I have a whole series of blogs which cover many different money topics titled ‘How to teach your kids about ….’ which I hope will help you learn something you might never have been taught before. Please share these with friends and family if you feel they might benefit from these topics but don’t want to make it about them directly. Using kids to learn about money provides a forum for you to learn and talk about money which I’m sure will help you become wealthier over time.
THREE: Kids less dependent on your finances
If we don’t teach kids about money, they are likely to form strong spending habits. The more they are spending, the less they are saving. With the cost of education and housing increasing at the rates we have seen over the last decade, it means that if our kids aren’t learning to save, they might be living at home for longer than ever before.
“In 2022, 19 percent of men and 12 percent of women in the 25-34 demographic cohabit with their parents.”
Their lack of savings might also mean parents have to dip into their retirement savings to pay for their higher education or living expenses. Ultimately, this results in parents being worse off than you probably hoped compared to kids who learn about money from a young age. Don’t get me wrong, if you teach your kids about money I wouldn’t expect them to end up buying you a new car or something like that when they become adults (although we can always hope!). If they learn to look after their money, however, it will help you hang on to more of your money, i.e. they become more financially independent sooner. Therefore, helping you become wealthier than you might otherwise be.
Teaching your kids about money can have a very positive impact on your financial future. The 3 ways this helps are:
Being a good money role model
Seeking help from others
Kids less dependent on your finances
I hope you are following the 3 Rules of Wealth yourself and avoiding these 4 Parenting Money Mistakes. If you feel that there are friends and family who might need some financial help, why not share a blog which focuses on their kids/nephews/nieces etc, rather than them directly, to get the conversation started? Alternatively, get them to read Grandpa’s Fortune Fables with kids ☺️
Thank you for reading - if you haven’t already, it would be great if you subscribe to my blog below. Will P.S., Have you ever thought about what would happen if you didn't teach your kids about money? It can be quite scary to think about. This is why I have put together a short online course to help parents teach their kids about money. You can check it out here