What Are You Teaching Your Kids About Money?
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Recently, in an effort to force myself to slow down a bit and actually relax, I started watching a few episodes of the hit-show The Goldbergs, which is set in 1980s Pennsylvania.
In one of my favorite episodes, Murray, the family patriarch, is sitting in his recliner, without pants, and his wife, Beverly, is in the kitchen, when his oldest son, Barry, approaches and asks for money. Here is their conversation:
Barry: What if I told you one day there’d be a piece of technology that can guarantee I play professional basketball? Well, that day has come. The Reebok Pump. A cushion of air around the foot that literally allows you to defy the laws of gravity. And the amazing part? It’s only $175. Don’t say no.
Beverly: Honey, I’ve got a pair of Reeboks upstairs you can have.
Barry: Oh, really? Can I please borrow your beige mom sneakers? Listen! My dream is to be a basketball superstar, not a nurse!
Murray: Well, here’s the thing about your dream. It’s stupid.
Barry: You have the money. Just get your pants and give it to me.
Beverly: Barry, your father’s pants are not a bank.
Murray: Money comes from hard work, you moron. You really want those shoes, come down to the store and work for ‘em.
Barry: Fine! But when I get to the NBA, and you want my autograph, I’m signing it, “Worst wishes, Barry.”
As I watched this episode, all I could do was laugh–a lot. An hour later, as I lay in bed, my stupid brain could not stop thinking about this conversation and the events which followed.
Barry Goldberg begins working with his father at the local furniture store. Ironically, he is a natural salesman and does very well, but his success comes after some early struggles. When his first payday arrives, Barry is astonished to receive a paycheck for $33.
Barry: Is this some sick joke? Oh. You’re just busting balls, huh? This is a joke paycheck.
Murray: I wish I was busting balls. Welcome to the real world.
Barry: I know I made more than this. Why is it so low?
Murray: Taxes! You got federal, state, social security, F.I.C.A..
Barry: What are you talking about? Those aren’t real things.
Murray: Did you ever go to school? Taxes? Those are totally real things.
Tough Love and Tough Lessons
In these two brief scenes, Barry Goldberg’s words and behavior provide a glimpse into the American entitlement culture and the interconnected role of money.
- Barry is easily swayed by the power of advertising.
- Barry expects money to be given to him rather than earned.
- When Barry begins to work, he overvalues his contributions and expects unrealistic earnings.
- Barry is oblivious to the basics of federal and state taxes.
Fortunately, Murray Goldberg, while unconventional, is a good dad at heart and teaches Barry key lessons about money in a very short time.
- Money is easy to spend but difficult to earn.
- Money comes from hard work, moron!
- Taxes are a painful reality.
Early Money Lessons
Fortunately, my Dad wasn’t too much like Murray Goldberg when I was growing up. He wore pants, most of the time, and didn’t call me and my siblings morons.
Like Murray, Dad worked hard to provide for our family, and he made sure that we did not go without anything which was truly a need.
On the other hand, we experienced our fair share of tough love, and I am grateful for that today.
Like Barry Goldberg, I used to ask my Dad for money for many unnecessary things, like going to the movies with friends or baseball cards. I quickly learned a simple lesson:
Work and get paid; don’t work – don’t get paid.
When Dad opened up his wallet, I could be sure that I would soon be raking leaves, mowing the lawn, or climbing up on the roof to clean out the rain gutters in order to earn the money bestowed upon me.
A Plan for Raising Children Who Understand Money
My wife and I do not yet have children of our own. However, between the two of us, we know a thing or two about teaching children as a result of our professional backgrounds as teachers. When we do have our own children, we plan to carefully implement the following techniques and teach financial lessons:
1.) We will let our children see how we manage our finances. We will be appropriately transparent, within obvious reason, so our kids learn the value of money.
2.) We will implement commission rather than allowance. Our children will learn that those who work get paid and those who do not work do not get paid.
3.) While the importance of work and the natural compensation which follows will be emphasized, we will teach our kids that not all work is for the purposes of getting paid. Sometimes, we will roll up sleeves and work to serve other people and support the community. Sometimes, we will work to care for our own household or personal belongings. Pay is not to be expected for all work.
4.) We will guide our children to give, save, spend, and invest. Dave Ramsey touts the “give, save, and spend” mantra, in that order, and I don’t have a problem with it. We want our children to experience first-hand that that money is not meant for hoarding; rather, it is a tool to take care of both oneself and others, too.
As a result, some of our children’s savings will be in a liquid money market or savings account. This won’t be about earning interest, which will be low, but it will show our children the value of having money remaining and to teach them not to spend all they earn. When they want to spend all of their money and deplete their savings, we will let them from time to time (this will be SO painful for me!) and allow them to learn from their mistakes at an early age.
In addition to learning about spending and proper decision making, we will teach our children about the power of investing when their limited earnings permit it. We believe that children can learn the power of compound interest at an early age. If their earnings won’t support investing, we will involve them in the process of funding their ESA and 529 accounts when they are mature enough to understand.
5.) Likewise, we will emphasize the importance of investing to instill a long-term mindset. We will start them early on this so they think investing is “just normal” and “what everyone else does.” They will be astonished when they look up as adults and see that their once small investment has grown due to time and compound interest.
Leaving a Legacy
As my wife and I get closer and closer to starting a family of our own, I have thought increasingly about the legacy we will leave behind. I have thought about all I have learned from my elders, including my Grandpa and Grandma and my parents. I know I will be like most parents and rarely have all the right answers.
In the ancient Book of Proverbs it is written, “A good man leaves an inheritance to his children’s children.” Through education and experience, we hope to leave this kind of inheritance, built upon a foundation of love, wisdom, and stewardship.
Readers with children, what have you taught your children about money? Do you provide an allowance? At what age do you believe children should begin learning about money?
Readers without children, how did your parents teach you about money? What lessons remain vivid in your memories today?