“Growing up, my family never talked about money.”
Sound familiar? It’s a statement as common as white bread with even more dire health effects. The fact is, most families do not sit down with their children and talk about money—how it’s earned, spent, invested or used. But that doesn’t mean that money lessons aren’t learned anyway. Our kids absorb through listening and observation. They know relative to their peers whether they have more (or fewer) toys and clothes, go on more vacations or have a bigger (or smaller) home. They form opinions, even without any formal discussion.
As the emerging professional said those words while talking about her money memories, I watched the look on her father’s face. He tried to hide his embarrassment, thinking that somehow he had failed his daughter. His fears were somewhat allayed hearing her talk about her strong money values and focus on building a goals-oriented financial life.
Money education is not necessarily the “sit at the kitchen table and let me tell you about money” formal lessons. It also comes in the form of watching, listening and gathering information. While the outcomes can be positive and strong, as it was in this case, it can be just as easily be destructive.
When I was eight, my father asked me to hand him the rip saw. I reached into his tool box and handed him a saw. Turns out it wasn’t the correct saw, but to me, all saws look alike. After being “firmly” instructed in the differences between a rip saw, a reciprocating saw, a circular saw, a compass saw and three more saws that meant absolutely zero to me, I realized my life would probably not revolve around the use of tools. And sure enough, it hasn’t.
Learning requires a teacher and a student, both willing participants. In my case, learning about saws was an epic fail. In the case of this woman and her dad, life lessons around money and goals were well taught and well learned. Families that live strong values around money have better than even odds that their kids have picked up on their lessons.
For those whose respect for money is less than golden, you might be passing on the same confused messages. Some prime examples? You grew up overly concerned with “what will the neighbors think?” or have a deep need to show wealth. Or maybe you never felt the need to save for the inevitable “rainy day”, avoid unnecessary debt and have meaningful financial goals.
One reason why many families don’t talk about money is our own discomfort around the conversation. It isn’t “polite” to talk about money. And parents may not have any real financial knowledge (which is about more than your investment portfolio). After all, how many parents are properly equipped to have a meaningful discussion on the importance of the definition and exclusions within a disability insurance policy, why you need a Durable Power of Attorney or how much should be in an emergency fund? We are more likely to talk about the weather in Thailand than to have a serious discussion of budgeting and tax deductions.
And yet, wanting a solid understanding of financial matters is something I hear all the time from clients who feel dissatisfied with their level of financial education.
I recommend taking the time to read and learn so that we can end the cycle of inadequate financial comfort. There are great resources available like “Financial Fitness Forever” by Paul Merriman or “The Wall Street Journal Guide to Starting Your Financial Life” by Karen Blumenthal. For those who find themselves caught in the mire of a poor money mindset, read “Wired for Wealth” by Brad Klontz, Psy.D, et al.
Financial literacy is important. It doesn’t mean you have to become a Certified Financial Planner, but you need to understand your financial life to improve it. Chances are you can hire someone who knows which saw to choose, but when it comes to your money, nothing beats a good education.