As parents, the first lessons we share with our children are those related to the values we expect them to live by -- we teach them about sharing, telling the truth, being kind and unselfish, and respecting adults. These lessons help them understand what's important in life; they're behaviors to help them succeed as adults. What parents may not realize is that the same values they instill in their children about life's large lessons are the same lessons that can make them financially responsible and help ensure their economic security.
It's not just about money, but about values and behaviors: appreciating the difference between wants and needs, and the hard lesson that waiting a little longer for what you want is worth the time invested. Delaying gratification is not something that comes naturally to children (or maybe to any of us), so we must explain how saving for what we may need in the future can be more valuable than spending on something we want now. Do we regret spending on something we had to have only to realize it would have been better to save for something more important later?
Financial savvy and success is about understanding and acting on the knowledge that every person is her or his own best advocate. Parents must teach their children to read the fine print and ask for expert help when they need it. We must teach them not to assume anything and to ask smart questions.
Many parents don't talk to their children about money because they're not sure they comprehend financial matters: calculating compound interest, choosing stocks, or managing 401K plans. But teaching values counts more than numbers and percentages. Parents must focus on the behaviors and values that will motivate smart, responsible decisions to ensure greater economic security for families and communities: don't spend more than you have; put immediate "wants" on hold for longer-term rewards; and give what you can to others in need.
Talking with children about money doesn't need to be complicated. It's a conversation that can evolve over time, beginning with simple concepts. The important thing is to start early and provide the context for the values and behaviors that will shape a child's life-long approach to finances. Parents can talk to even very young children about saving or spending that precious small amount from the "tooth fairy" or how to manage the first modest gift of money received as a birthday or holiday present or their first allowance.
Over time, parents may want to discuss saving for college; making the best use of wages from an after-school job; or understanding of the expenses involved in buying and owning a car, beyond the initial purchase (insurance, repairs, gas, parking). Eventually, there may be conversations about debt, credit, loans, or about risk and return on investment.
Financial literacy is critical to the economic success of families and communities. That's why at PwC we've invested in the development of integrated curricula, teacher training, classroom programs and parent involvement initiatives for communities across the country. Through Earn Your Future, we have become increasingly aware of the pivotal role that parents play in their children's financial education. Teachers tell us that classroom lessons must be reinforced at home and that parents' values directly impact their students' behavior around and attitudes toward money.
Perhaps nothing influences a child more than the example set by his or her parents. When parents are comfortable talking about money -- their income, household expenses, and their own wants vs. needs -- chances are their children will be, too. The expression "talk is cheap" is clearly not the case when it comes to our children's financial education.
This blog post is part of the 'FinEd for Parents' blog series, curated by the editors of HuffPost Financial Education to provide parents with expert advice and tips for managing family finances and raising money-savvy kids. To see all the other posts in the series, click here.
