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A Parents Finance Manifesto

As we prepare to ring in the New Year, many people are still contemplating what, if any, resolutions to make moving forward.

Often our New Year’s resolutions focus inward, directed towards some form of self-improvement or lifestyle betterment. These resolutions can be extremely positive and impactful, but what about thinking just a little bit broader this year?

What better resolution to set than to work on improving and building your child’s financial literacy? That’s a resolution with a compounding, lifelong return on investment.

After all, raising our kids with the skills and abilities to be happy, healthy and productive members of society isn’t just a goal to aspire to, it’s our job. A job we sign up for the day we decide to bring kids into this world. And if we aren’t doing our absolute best to provide our kids with a strong foundation in finance, we aren’t doing our job as parents.

In order to set our kids up for success, here’s a parenting manifesto that can help you frame your New Years resolutions in order to nurture and improve your own child’s financial literacy.

1 – Take Full Ownership of Your Parenting Responsibility. 

Parenting is one of most challenging jobs on the planet, and yet it comes without a contract. I feel like there should be a contract.

I had to sign a 32 page contract written in the tiniest print ever just to have cell phone service, how is there not a contract for being entrusted with the life of another human being?

While the many responsibilities of parenting may be lacking that formal contract, owning your parental responsibility to your kids is the biggest and most important step in teaching them the life and financial skills they need in order to grow into those happy, healthy and productive members of society.

It’s no one else’s responsibility. Period.

If you have the added bonus of grandparents, or teachers who happen to take a vested interest in teaching your kid these skills, BONUS! That is awesome. But if you are relying on your kids teachers, coaches, babysitters, day care workers etc, to impart these essential life skills, your kids are going to be at a major disadvantage.

2 – Be Your Kids Money Role Model

Kids learn in many ways, none of which are stronger and more influential than observing their parents.

Monkey-see, monkey-do. If you want your kids to manage their money well, then you have to start by managing your own money well and demonstrating sound financial decisions in your day to day life.

If you aren’t feeling confident in the example you are setting for your kids, then the first place to start is by improving your own financial knowledge and habits.

3 – Talk To Your Kids About Money Everyday

Start talking about money with your kids. Whether its because discussions around finance were once considered an adult topic or taboo to discuss openly, there is still way too much that remains unsaid when it comes to talking with our kids about finance.

I know far to many people who tell me that their kids are in their early teens, and they haven’t had a single conversation about money. Often the rationale is “They don’t need to know that stuff yet.” Um…..YES THEY DO! Money is vast topic, and it requires a lot of skill sets to support sound money management. Those skill sets need to be nurtured in our kids from a young age, an age where they can make financial mistakes and learn from them without those errors resulting in significant consequences. You DO NOT want your kids learning about money through trial and error when they turn 21, max out their credit card, miss their car payments, blow their credit score, and have outstanding credit accounts at 8 different Money Marts.

So whether it’s discussing the grocery budget, planning school lunches, household bills, vacation plans, wants vs. needs, or delving into compound interest, we all have an endless amount of money related interactions and decisions to make all the time. Pick one of these opportunities each day and engage your kids about your decision making process. Overtime, their knowledge will compound exponentially.

4 – Build An Environment Where Your Kids Can Grow

Kids are way more capable than we ever give them credit for these days. Think about what kids a few generations ago were expected to do, and compare it with the responsibilities we give our kids now!

Our kids abilities and independence will grow in a manner equivalent to the responsibilities and expectations we set for them, and in order to develop essential emotional skills, such as confidence, self-motivation, perseverance, and impulse control, kids need to be given room to learn, AND room to fail.

I’m all for letting kids be kids, but if you put them in a box, baby them, and never ask or expect anything of them, you have no one to blame but yourself when you create an incapable young adult who complains at the slightest prospect of work.

Instead, build age appropriate responsibility and expectations into their lives from day one, and reap the rewards of raising capable AND confident people.

5 – Teach Them To Evaluate Their Spending

If you aren’t already modelling excellent spending habits yourself, go back to point 2 and start there. If you are, talk through the process with your kids. Teach them how you evaluate purchases, when to buy used or new, how to be patient and save up for what you want, and how to learn from your past spending in order to shape future habits.

I’m a big fan of teaching our kids what I like to call the dollar per hour of fun equation. Much like a cost per wear calculation for clothing, I teach our son to think about past purchases and evaluate them based on a dollar per hour of fun average. For example, if he bought a $30 toy and only played with it for a grand total of 3 hours, he would have a cost of $10 per hour of fun. Compared to a $100 purchase that he played with over its lifespan for a combined 200 hours, resulting in cost of 50 cents per hour of fun, it helps highlight the importance of considering the value and usefulness of an item, not just the price.

This gives him a clear way to assess whether a given purchase was a solid investment, or a total flop.

Another excellent way to learn the value of well thought spending is to have your kids try and sell no longer needed items, particularly when they purchased the item themselves. This allows them to have their eyes opened to the loss of value an item often incurs just because it is “used”. Going through this exercise with them can also prove to encourage them to buy used themselves in the future.

6- Stay Consistent. Parenting is a Marathon, Not a Sprint.

Pick any parenting topic out there, manners, behaviour, sleep, eating, homework, chores, finance, and on and on, all require us to set appropriate boundaries and expectations for our kids.

All of which is done with the hope that as our children get older those boundaries will allow them to grow into adults that are able to self-regulate, and make appropriate decisions for themselves.

But as important as those boundaries and limits are, I don’t think there is a week that goes by in the life of a parent where you don’t find yourself questioning if at least some of those boundaries are doing ANYTHING AT ALL.

There have been many days when I’ve exasperatedly looked at Mike and asked if our oldest was learning ANYTHING from all our efforts to teach him how to manage his money, do his work first, and delay gratification.  DAILY I wonder if our toddler is learning a single thing from the behavioural boundaries we set!

When you are in the day to day, it can sure feel like all your efforts are in vain, like you’re not making any progress. On those days it can be difficult to see the positive cumulative effects of engaged and consistent parenting, and it’s easy to begin questioning whether its worth all the extra effort. Because let’s be honest, being an engaged parent takes a WHOLE lot of extra effort. But it’s worth a reminder for all of us, repetition in setting limits and providing consistent learning opportunities, literally shapes our kids brains, how they think about things, and their future habits.

A momentary step back to see where our kids were a few months, or even a year ago, can often highlight just how much they’ve developed their abilities, knowledge, and self-regulation. That perspective can be just enough to provide us with the motivation and inspiration to continue putting in the work.

If you make these 6 commitments part of your everyday life, your kids will develop all the financial knowledge and understanding (and a whole bunch of other amazing life skills) they’ll need to grow into those happy, healthy and productive members of society we all want our kids to be.

As we close out 2018, I just want to take a moment to thank all of you for continuing to support and read the blog. If you have questions, comments or feedback to share, please leave a comment, or send me an email! I do my very best to respond to all emails!

If you’ve been enjoying the blog or found our content helpful, please help us reach more people by liking or sharing our content!

We are looking forward to bringing you some great stuff in 2019, so stay tuned!

Wishing you all a very safe and joyous New Years Eve, and an exciting and prosperous 2019!

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