Don't Go Henry, Go Cash, First - rushing kids onto bank cards could ruin their financial future
,There are a lot of apps out there right now purporting they’re the divine intervention you’ve been waiting for to turn your kids into personal finance ninjas…news flash: you can’t delegate teaching your kids about money to an app.
The app may be able to relay some basic knowledge but ultimately the best builders of wealth need to only master one thing: their emotions.
And, like as not, all the behaviours around money in your house – and yes, not talking about money at all counts as ‘a behaviour’ are all adding up towards what your children will ultimately believe about money and how it ought to function in their lives.
This is what financial psychologist, Brad Klontz, calls money scripts.
In addition, we humans are hard wired with certain biases: loss aversion, optimism or confidence bias, the pull of instant gratification, action bias and a bias towards earning rather than saving, to name a few.
The money scripts you pass on to your children interact with these biases to determine their future responses, fears, anxities and attitude to their financial affairs.
So, now that I have scared the bejesus out of you, what can you do to pass on a more rational approach to money.
Well, before you expose them to cash cards or debit cards give them cash – I’m a supporter of making them earn it – then see what they instinctively want to do with it and capitalise on the teaching moments that will bring, and there will be many.
My son’s basic knowledge of money acquired through our going through stage 1 of B.School for Money-wise, Wealth-bound kids means we are now having really good discussions about money and his reactions to it.
And having heard Brad Klontz on Paula Pant’s Afford Anything and now on Hidden Brain I have bought Money Mammoth (Amazon USA, Amazon UK) and if I enjoy that I will read more of his books.
Are you consciously thinking about how your household’s behaviours around money are impacting your impressionable little ones?
Heather on Wealth
I enjoy helping people think through their personal finances and blog about that here. Join my personal finance community at The Money Spot™.