The way we approach money and communicate with our children can have a generational impact on our family.
It can help determine if our children will manage their money well, achieving their financial goals, or if they will make bad money decisions, continually struggling financially.
The relationship with money differs for each one of us and is determined by our experiences with money, knowledge about money, and attitude toward money. People can relate to money in unhealthy ways, on either end of a wide financial spectrum, or they can have a healthy relationship with money, somewhere in the middle.
Our goal as a father should be to manage our finances in a positive way and to teach our children how to have a healthy relationship with money.
When You're Too Afraid to Spend Money
I knew someone that grew up during the Great Depression in the 1920’s. She grew up on a farm in rural Alabama, and her family was very poor. Her experiences as a child, growing up having nothing, impacted the way she viewed and managed money.
Even though she and her husband made a good living and were secure in their finances, she always talked about not having money, was very frugal, did not want to spend money, and would hide money around the house so that she would have it in case of an emergency.
When she died, her family was cleaning out her house and noticed something in the mayonnaise jar. They pulled a sandwich bag out of the middle of the jar with money in it. They went back through the items they had already removed from the house.
They found money hidden in the middle of frozen peas, in the pockets of purses, in envelopes taped to the bottom of drawers, and many other places. She didn’t spend extra money on herself or others but had thousands of dollars hidden around her house.
It did not make sense that she had the ability to meet her financial needs but still worried about money all the time.
When You Live Beyond Your Means
On the other hand, I know someone that grew up in a family with a moderate income and did not have many financial needs.
When he became an adult, he had a good paying job and was very successful. After he and his wife got married, they built a beautiful new house, and he purchased a new car for his wife. They enjoyed hosting dinner parties for their friends and family and went on lavish vacations. On the outside, it looked like they were living the American dream and some of their friends were envious about what they had.
The truth was that they had tried to accumulate in 3 years of marriage what their parents had accumulated in 30 years, and they were living above their means. This caused several issues. They had borrowed all the equity in their home, they had several credit cards that were maxed out, they owed more on their cars than the cars were worth, and the financial stress had caused a strain on their marriage.
It did not make sense for them to have enough money to live a comfortable lifestyle and still have financial problems because of the way they managed their money.
Teaching Kids Money Management + Work-Life Balance
We teach our children to be physically active, eat a balanced diet, and live a healthy life, but oftentimes, we fail to teach our children to have a healthy relationship with money. It is not healthy to approach money from one extreme or the other.
Our relationship with money needs to have balance. The saying you may have heard from your father, “Do as I say, not as I do,” does not really work. Our children will notice how we approach work and money.
If we do not work hard and expect the government or other people to feel in the gap for the financial needs we have, our children will learn from our behavior and may grow up feeling entitled and unmotivated to work. If we put all our time and effort into our work, our children may think that accumulating wealth is more important than anything else, or they may resent the fact that we valued our career over spending time with them. We need to teach them to have a strong work ethic, but we also need to have and exemplify a healthy work-life balance.
Another area that our children notice is how we spend and manage money. We might be so tight with our finances that we neglect our needs and the needs of our family in an effort to save as much money as we can.
We also might spend everything we make on unnecessary wants that cause issues when legitimate financial needs arise and we do not have enough money to meet those needs. Either way, these approaches to spending are unhealthy and will impact our children and their spending habits.
The way we approach work and manage our finances may not make sense to our children at the time, but can impact the financial health of our family and the relationship our children have with money. It does not matter how much money we have or the amount of money we earn, the decisions we make about money are important.
Evaluating the way we provide for the current needs of our families, save for future needs, and bless others by giving generously is a good way to gauge how we are doing financially. As fathers, if we have a healthy work-life balance, spend our money wisely, and develop a savings plan, we can have a healthy relationship with our finances and impact the way our children relate to money. So, use your dollars in a way that makes sense.
Financial Fundamentals:
1. Work a regular schedule.
Work on time management and be productive during regular work hours.
2. Prioritize time with your children.
If you work long hours, give your children your undivided attention at home.
3. Create a spending plan.
Track your spending, make adjustments, and reduce cost where possible.
4. Make savings a priority.
Set aside money for emergencies, retirement, and large purchases.
5. Set financial goals.
Examples: save $1,000, pay cash for a car, pay off your house, retire at 65.
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