5 Money Lessons Every Parent Should Teach Their Kids
In a world constantly revolving around finances, teaching our children about money is more crucial than ever.
Yet, many of us grew up with money being a taboo subject, often discussed in hushed tones of scarcity or difficulty.
This post is inspired by Daniel Priestley's video on the same topic.
"My goal is to equip my kids with a robust and healthy relationship with money. This isn't about teaching them to chase wealth, but to understand financial principles that empower them throughout their lives.
-- Daniel Priestley"
Money Is Not Scarce
Abundance Mindset
One of the most powerful mindset shifts we can adopt and teach our children is that money is abundant, not scarce. The planet currently holds trillions of dollars – it's a concept, an idea we continually generate.
Money flows freely through economies, changing hands countless times daily. When we operate from a scarcity mindset, we limit our potential to attract and manage money. Instead, teach your children to see money as a flowing resource, always available for those who learn how to access it through value creation and fair exchange. This shifts the focus from 'there isn't enough' to 'how can I create value to earn it?'
Money Loves a Purpose
Intentional Allocation
Money, like water, flows best when it has a clear channel. It thrives when given a purpose. Imagine an emergency needing funds – resources often appear because the cause is compelling.
This principle applies to personal finances too. Teach your children to allocate their money into 'buckets' for specific goals: a savings account for a future dream toy, an investment account for long-term growth, or even money set aside for generosity. When money has a distinct role, it becomes easier to attract and manage, fostering intentionality over impulsive spending.
Money Loves Speed and Outcomes
Value Over Time
In a traditional hourly job, we're paid for time spent, which can inadvertently teach us to slow down. But in the real world of value creation, money is attracted to speed and outcomes.
The faster you deliver a valuable result, the more money you tend to attract. I teach my kids that completing a task quickly and effectively often leads to a better reward. This cultivates an entrepreneurial mindset, focusing on efficiency and tangible results rather than just the passage of time or effort. It encourages them to think about how they can optimize their actions for maximum impact.
Money Is Just a Tool
Neutral Instrument
Money is neither good nor evil; it's simply a tool, much like a hammer or a car. Its impact depends entirely on how it's wielded. A knife can prepare a nourishing meal or cause harm.
Similarly, money can build businesses, fund education, or be misused. The critical lesson is to understand money as a neutral instrument and to learn the skills necessary to handle it effectively. This includes understanding different financial tools like debt (which can be leveraged for growth) and savings (for security and future investment). Knowing how to use these tools properly allows for effective financial management and avoids potential pitfalls.
Money Loves Attention
Mindful Engagement
What we pay attention to tends to grow. This holds true for money. When we give money careful consideration – tracking where it comes from and where it goes, planning for its use – it tends to multiply.
We see this in compound interest, dividends, and rental income. Conversely, if we ignore our finances, money has a way of 'magically disappearing,' often finding new owners or slipping through our fingers unnoticed. Teach your children to be mindful of their money, to engage with it, and to appreciate its presence. This active engagement fosters responsibility and allows them to harness its growth potential.
Empower the Next Generation
By reframing our conversations around money and intentionally teaching these five lessons, we empower our children to develop a positive and proactive financial mindset.
This approach prepares them not just for managing their personal wealth but for understanding the broader economic world and their potential to thrive within it. Let's move beyond financial taboos and equip the next generation with the knowledge and confidence to build their own prosperous futures.
