Financial Lessons: I learned It by Watching You

The 1980’s anti-drug public service announcement where a father finds his son’s drug stash and confronts him, only to learn the horrid truth, “I learned it by watching you.”

Some things never change and the depths of your parental influence run greater than you may think.

Your kids are watching your every move, even how you manage money.

Every moment can present a learning opportunity.

Think about the typical week…

Monday: You are dropping your child off at school and they remind you they don’t have any money in their lunch account. You respond with an off-handed, “I’ll just wait till they send me the bill.”

Lesson learned: It’s okay to pay on credit or not at all.

Tuesday: You and your spouse are discussing the upcoming weekend and a dinner invitation from the neighbors to a local upscale restaurant. You feel the expense doesn’t fit into your budget and you should decline. Your spouse really wants to go and expresses their disappointment with a few choice words. Your child walks into the argument and asks why you are yelling. You respond,”We are arguing about money again.”

Lesson learned: Money causes arguments.

Wednesday: You take your child to the grocery store with a budget, a list and coupons. As you walk down the aisles they ask for a new box of cereal, fruit snacks, and cookies, all items not on the list. You give in and allow them to place the items in the cart.

Lesson learned: Its okay to deviate from your list and budgets don’t really matter.

Thursday: It’s pay day and you go through your bank’s drive thru window requesting that your paycheck be cashed. Your child asks why you didn’t save any of the money. You respond with, “ I can’t afford it.” Then frivolously spend the cash in hand over the next week.

Lesson learned: Saving money isn’t important.

Friday: A bill collector you have been dodging gets your child on the phone and asks to speak to you. You immediately hang up the phone when you realize who it is and your child wants to know why. You explain that it’s someone that wants money and you don’t have any to give them.

Lesson learned: It’s ok to avoid paying bills.

Lacking the tools, they are watching you

A new study by ING Direct found that 87% of teens know very little about personal finance. The teens in the study realize the importance of savings, but are lacking the tools they need to budget, save, and prepare for the future.

Only 1 out of 5 parents in the study feel they are setting good financial examples for their kids. As you can see from the above example your kids are watching; at the cash register, the bank, and even in your own home. Following your lead is the way they learn life lessons, especially personal finance.

Make Life Lessons Count

Instead of beating yourself up for not being able to pay a bill or save money use the opportunity to teach your kids valuable lessons:

  • Save when you can and a little even when you can’t.
  • Don’t buy what you cant afford.
  • Live within your means.

Teach Wants vs. Needs

If your child wants something instead of just getting it for them make them work and budget for the coveted item.

Make Them Work for It

Nothing teaches responsibility like hard work. Allowance has fallen by the wayside in many families I talk to, and that concerns me. An allowance is the gateway to many important lessons that can never be learned from a book; work earns you currency, saving for a rainy day is important, and budgeting is the best way to get to where you want to be.

Be the influence your kids need even if your personal financial situation is not what you would consider picture perfect. By watching your mistakes and then hopefully your corrections such as finding debt relief, saving for retirement, and building an emergency fund will help your kids gain these powerful financial tools they will need when they venture out onto their own.

Are you proud to say you are modeling financial lessons for your kids? Good or bad.

Photo Credit

About Suzanne Cramer

12 Responses to “Financial Lessons: I learned It by Watching You”

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  1. Ouch!

    Good ouch, but ouch nonetheless! Fortunately, the flip side is true, too. Good modeling also gets noticed. My wife and I were both fortunate to be raised by responsible parents, so we were certainly beneficiaries of this principle.

    Very good article, thanks!

  2. Yes it does! I was also raised by financially responsible parents 🙂

  3. At one of my speaking engagements and interview, I discussed about the ING study. But it wasn’t a surprise to me. Speaking among parents, I’ve learned that money is a difficult subject..many feel embarassed or don’t think they know enough. But they do.

    A gentlemen I spoke to told me, he gives his little girl money to give to the cashier and then ask for the receipt. It’s a good start to introduce her to buying items with the money you have.

    Thoroughly enjoyed your piece! 🙂

  4. @Ornella I am glad you enjoyed it! I think as parents we are often so busy or caught up in the day to day to realize just how much our kids look up to us. The gentleman you talked to is teaching his daughter a great lesson and he most likely didn’t give it a thought 🙂

  5. Yikes. I’m no parent, but I hope I remember that kids soak things up like sponges when I have little ones. Thankfully, my parents set great examples.

  6. Kathy says:

    As I don’t have kids, this article doesn’t relate to me, right? Wrong! My nieces are 7 & 9 1/2 and they just spent two weeks with us. When we went out one day, the 7 yr old was with me and we went to Starbucks. She was very excited. And, the only reason why we went was because I had a gift card. So, explained to her that I don’t spend ‘money’ there, I only go when I have a gift card. Because I consider it a treat.

    Another lesson with the 7 yr old was that her birthday just recently passed. I took her to Target to pick out a gift of her choosing instead of me picking something she ‘might’ like by myself. Well, she had $20 to spend, and it took us quite a while for her to pick out ‘just the right stuff’ because she was very aware of her $20 budget.

    Growing up, my father stated things that ‘should be done’ with no explanation. Just ‘do what I say and don’t ask questions because I just gave you good advice’. Well, being who I am (I rebel against being ‘told’ what to do), I didn’t listen to alot of it. And, I’ll bet much of the advice he gave was great. Now, if he would have discussed things with me, I’m pretty sure I would have listened.

    Presently, my thoughts are that finance should be taught in school. Starting early could possibly cement some good and informative future financial decisions.

    • @Kathy I also feel personal finance should be taught in school 🙂
      Unfortunately the battle has not been won in many states and it is still something parents inevitibly pass along to their children. You are also right about having an influence on children in your life even if they are not your own!

      I think having good role models regardless of who they are or the role they play in the childs life are so importnant.

  7. My kids are only in grade school. But as early as now, we are already teaching them how to save. Last week, my son asked if I can drive him to the bank. When I asked why, he said he will withdraw some money from his savings to buy a new toy. I asked if the toy is something he urgently needs or he simply wants to have a new toy. He said that all his playmates have that kind of toy so he must have one as well. I tried to explain that he already has a lot of toys and not because his friends have it, he should also have one. It is like buying a new van because your neighbor recently purchased one, although you have a sedan, an SUV, and a pickup that you do not regularly use. I was glad he got my point without so much explanation.

    • @Manette Ah yes “Keeping up with the Jones’s” even applies to the kiddos!! They learn early on to covet what others have. I am glad you were able to intervene and teach that important lesson!

  8. I hope that if we have a kid, that they can at least learn great personal finance stuff from us. I would just die if I had to explain that we were dodging creditors. But the sheer responsibility of raising a kid is still a bit much for me and hubby. Great post! Each example made me cringe a little more…

    • @Crystal I am glad you enjoyed the post 🙂

      Yes that would definitely be a dicey conversation and sadly it is a reality for many families today. Lesson learned if you cant afford it don’t buy it and pay your bills!

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