Raising a child to be smart, knowledgeable and confident about money is hard enough … but it's even harder in a time of financial turmoil.
How do you teach the right money lessons when even you’re not sure what the correct answers are anymore?
Should you still raise your child to pursue her dreams … or steer her toward a steady career in a growing field, like solar panels or supply chain management, even if she shows every sign of growing up a writer?
Get started with a free financial assessment.
Get started with a free financial assessment.
Knowing the answers isn't easy—but it turns out there's a right and a wrong way to teach kids during lean times.
We spoke to John D. Spooner, author of “No One Ever Told Us That: Money and Life Letters to My Grandchildren.” Spooner, a successful financial advisor, wrote his new book to help guide his grandchildren through college, the workplace and the world of money.
In fact his experience raising his own three kids through rocky economic times (his career has weathered four financial panics), made him the perfect source to help us answer the question: "What's important to remember when raising kids in times of financial turmoil?"
We asked for his advice, and these, he says, are the five rules he lives by:
1. Sometimes, it's okay to put your career first.
Spooner says, "Think of it this way: If your business doesn’t hold up, then it’s easier for your family to have trouble. In order to teach your children good money lessons, it’s important for you to be a good financial role model, and sometimes that means putting your career first to make sure that your family will be financially stable … especially during a recession, or when your industry is in flux."
LV Tip: We know it’s easy for working moms to feel guilty about putting time in at the office. In fact, in this article we talked about a new study that found that 71% of moms aren't doing what they really want to when it comes to work. The important thing is to keep communication open so that your kids understand why your job is so important for your family, which brings us to ...
2. Don’t be afraid to be honest with your children.
"If money is tight and you’re anxious about it, your kids will notice," says Spooner. "Don’t be scared to gather your children around and explain to them that things will be a little different at home for the near future. There are times when you have to tell your kids that you’re going to have to cut back on what you can buy or what you can do, like going to the movies, as a family."
LV Tip: While it's great to be honest, there's no need to go into every single detail with your children. It's important to teach them about budgeting (check out these tools for doing so), but it's not necessary to tell that that you're freaked out about your retirement savings since your portfolio took a nosedive. Take a look at these money milestones for children to see what age is appropriate for talking about a given financial topic.
3. Don’t feel bad about saying no.
"Think of it this way," says Spooner, "there are more benefits than drawbacks about growing up during hard times, or not hearing 'yes' all the time. It means that your children won’t take anything for granted, which is a huge positive in life. Teaching your children that wonderful things in life are earned by hard work will endow them with the work ethic they need to succeed later in their careers."
LV Tip: Teaching your child to wait for good things in life can actually set them up to be better with their own finances later on. Not being able to wait, or being impulsive, has been linked to a rocky relationship with money, according to experts. Find out how to tell if your child is already demonstrating signs of impulsiveness--and what to do about it.
4. Be your own biggest advocate—and let your children know it.
"If you need to tell your children that money is tight, it’s especially important to assure them that you will be able to take care of them," advises Spooner. "During a financial panic, I told my children, 'I’m not afraid of hard work, I believe in myself and I’m going to keep going to work everyday. Just because times are tough, it doesn’t mean you can stay in bed or fake sick, because this household can’t run without my hard work.'"
LV Tip: It's not about just saying you're confident, you actually should be confident in your (and your partner’s) moneymaking abilities. Make sure you talk to your kids about hard work, and how that enables your family to get more of what you want in life. Expressing confidence to your children will help them feel secure (even if you’re inwardly anxious), and there's something to be said for faking it till you make it. If you're really feeling good about the work you’ve been doing, maybe it’s time to ask for a raise. Read these tips for how to negotiate successfully.
5. Encourage your children to pursue their passions—not take the safe route.
"Yes, the job market has been stalled in recent years, but I really feel that you should still encourage your children to pursue their dreams—not to take a 'safe' path or enter into a 'safe' career out of fear alone," says Spooner. "There’s no such thing as an 'easy' career—every job will have its ups and downs. Having passion for a job will enable your child to weather the ups and downs that will undoubtedly occur.
"I also feel strongly that having special interests or talents will help kids get a job in the first place during a difficult economic climate. I see dozens of résumés every year from people who want to enter into the financial industry—and the résumés are totally boring. What often jumps out is the interests or hobbies listed. You might get an interviewer who had the same interests—and that can set a positive tone for the entire interview."
LV Tip: Finding activities your child loves isn't just a future résumé builder, but it's never too early to start. He'll make new friends, learn new skills, develop talents and build up his “sticktoitiveness” muscles. To find an afterschool activity that will work for your child and your budget, read this guide.