In Five Ways to Raise Money-Smart Kids: Part Two, valuable ideas and action steps are provided to identify your children’s money scripts and course-correct them if necessary. Or, perhaps behavior modification and balance are required for a child exhibiting the most positive money script, such as Money Vigilance.
As I mentioned in Part One, financial literacy is fair or average globally. Per insights from the recent Standard & Poor’s Global Financial Literacy Survey:
Financial literacy rates differ enormously between the world’s major advanced and emerging economies. On average, 55 percent of adults in the major advanced economies–Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States–are financially literate. In contrast, in the major emerging economies—the so-called BRICS (Brazil, the Russian Federation, India, China, and South Africa)—on average, 28 percent of adults are financially literate.
As a result, it’s up to parents and grandparents to step up and assist the next generation in making smart money decisions. If you’re reading our blog, I’m sure you’re ahead of most with this initiative.
Delayed gratification: A key to building financial discipline and a secure future.
Thirdly, teaching children to delay gratification is the gateway to financial literacy. Children and teens who wait to purchase or weigh the pros and cons of spending money will likely save for long-term goals and resist impulse purchases. As a result, the concept of ‘pay yourself first’ takes on significance. The kids grow to be adults who prioritize saving and investing.
Last, in Part Two of Raising Money-Smart Kids, I provide tips to help parents coach their kids on immediate gratification.
Five ways to raise money-smart kids: Part One. Where do parents start?
Know yourself, and understand them.
Children observe your ‘relationship’ with money. They’re forging their personal money script with your help, like it or not. Household money and debt management habits will either develop positive habits or accentuate negative ones. They can even propel your kids in the opposite direction, perhaps to an extreme.
For example, my parents were terrible with money. They rarely saved, overspent, and ultimately left debts behind when they died. As a result, financial insecurity is a fear of mine. Thus, my dominant Money Script is vigilance. Perhaps, too much so.
Dad would have benefited from five ways to raise money-smart kids!
My father was a great example of a money-status seeker, as he always required the trendiest clothing, the flashiest jewelry, and the hottest car. Don’t get me wrong. I loved my father but learned what not to do from his relationship with money. Although not dominant, Money Vigilance is also part of my financial imprint. As a result of understanding my Money Script®, I am mindful of the behavior and recognize and control it.
Money Scripts® is a concept created by financial psychologists Brad and Ted Klontz. They are unconscious, trans-generational beliefs about money developed in childhood and drive adult financial behaviors.
Basically, there are four categories:
- Avoiders believe money is evil and rich people are greedy.
2. Worshippers believe more money will solve all their problems.
3. Status seekers equate self-worth to net worth and place a premium on buying the newest and best things.
4. Vigilance is exhibited by those who are alert, watchful, and concerned about their financial health.
Do you dare to understand your Money Scripts®? Five Ways to Raise Money Smart Kids: Part One needs you, as a parent or grandparent, to get a handle on your personal money DNA.
You can receive a complimentary KMSI-R at www.datapoints.com. Or, head to www.riaadvisors.com and click on Insights. From there, scroll down to Guides. Sign up, and take our Millionaire Next Door quiz. Once completed, you’ll receive an e-mail link to take the Money Script® assessment and find out where you stand!
Aren’t you excited?
Overall, money scripts are always learned in childhood, often unconscious, passed down through the generations, partial truths, and responsible for our financial outcomes.
Once your Money Script® examination is complete, you’ve analyzed the report, and you understand your dominant and secondary money script behavior, we’re ready to move on.
Five Ways to Raise Money Smart Kids: Part Two includes ways for parents to recognize Money Scripts® signs in their children and lessons to teach.
In conclusion, Five Steps to Raise Money Smart Kids: Part One is designed to direct you and your children to a lifetime of money awareness, security, and wealth.
Related: Five Ways to Raise Money-Smart Kids