“Dad, what is money?” my four year old asked me as I picked him up from school on a cold winter afternoon. His question surprised me. Did his teacher mention “money” during class today or did one of his friends say something to him on the playground about money? I quickly distracted him and asked him about his day and what snack he wanted to eat.
His question got me thinking…
I know what money is. I spend money, save money and invest money. But, how do I explain this to a four-year old?
I had no idea how to explain money to somebody so young.
My son’s unanswered question bothered me for many years and, eventually, I wrote a 200-page book on the subject.
Personal finance and basic money management is generally not emphasised in schools, so the responsibility for teaching this touchy topic falls squarely on the shoulders of parents.
There are several reasons why parents may not follow through on this responsibility.
Some parents may feel their children will fill figure out “money stuff” on their own. While this may be partially true, there is no reason to allow your kids to drown because of a lack of understanding about money. If handed a car and car key, most teenagers could eventually figure out how to drive, but no sane parent would let their child risk injury learning how to drive by trial and error.
Another reason could that parents live in a constant state of overload. Many parents are struggling to meet work, financial, social and family obligations that require them to have the energy of the “Energizer Bunny”. It is easier for parents to throw their hands up in the air and say, “ I don’t have time! Let the schools do it – that’s what we pay teachers for.”
Kids who don’t receive basic guidance about financial matters at a young age, have the potential of suffering some hefty bumps and bruises along the way. Parents must remember that the responsibility for educating our kids about personal finance is always with us – even after our kids finish school and transition into their early young adult lives.
It is never too late or, too early, to help your kids understand their relationship with money.