After our second book, The Financially Intelligent Parent, was released, we got a lot of questions about just what is a “financially intelligent parent?” Were we talking about a parent who knew how to balance her checkbook and make good investments in the stock market? Or was it something else? Our answer is that it is very much something else. We’re not trying to help you save enough money to pay for your child’s college education when she reaches eighteen, we are helping you raise children who are successful, generous and responsible with money whether or not they go to college!
Our research has shown that financially intelligent parents:
- Are optimistic about their ability to change money behaviors.
- Value the difference between financial savvy and financial intelligence.
- Think long and hard about the meaning of money in their lives.
- Consider the financial education of their children a primary parenting responsibility.
- Recognize that their unconscious money deeds have at least as much impact on their kids as their conscious money words.
- Feel that “no” and “enough” are words that children need to hear as part of their money education.
- Want their children to work more for a sense of satisfaction than for money.
Let’s look at each of these beliefs or attitudes a little more closely.
Financially Intelligent Parents are optimistic about their ability to change money behaviors.
When we pass away, our children inherit our money; during our lifetimes, they inherit our beliefs about money. A financially intelligent parent understands that money history doesn’t have to repeat itself. Your children don’t have to inherit your anxieties or problems related to money.
In other words, financially intelligent parents believe that both they and their kids are not locked into a behavioral pattern, that even if they’ve exhibited negative behaviors in the past, they can change in the future. They also believe that their children are capable of adjusting and outgrowing bad attitudes, that they aren’t doomed to be forever greedy, entitled or careless when it comes to money.
We can’t overemphasize this related point: financially intelligent parents understand that it’s never too late to start! We’ve helped parents of adult children successfully change their money behaviors, and their kids have responded positively.
Helping children become financially literate takes time and patience. You’re going to feel frustrated in trying to encourage your pre-teen to be less materialistic. You might be upset with your teenager when he displays little empathy for those less fortunate than himself. Similarly, you’re going to find some of your ingrained money attitudes and behaviors hard to shake. If you’ve been obsessively cheap for 30 years, for instance, you will have to struggle to display a healthier attitude toward spending, especially in the presence of your children.
The good news is that optimistic parents usually succeed at changing their behaviors and helping their children change. They don’t give up when their children do stupid things or when they find themselves falling into old patterns. They persist in the belief that with patience and practice, financial intelligence is possible for them and their children.
Financially Intelligent Parents value the difference between financial savvy and financial intelligence.
Being financially savvy means that you handle your finances well. You budget appropriately, save for retirement, invest intelligently, avoid credit card debt and pay your bills on time. But you may be totally oblivious to the messages about money you are sending your children. Financially intelligent parents tend to be financially savvy, but even if they are not, they are aware of what they are teaching their children about money.
One parent we know, for instance, was socially conscious and involved in a variety of charitable organizations. He was also very smart about spending his money carefully and saving wisely, and he did a good job of teaching his children budgeting, investing and other financial skills. This man, though, was savvy rather than intelligent. He showed absolutely no balance, lecturing his children from the time they were toddlers about “wretched excess” and the need to live simply; refusing to buy products and services from at least half of all businesses because of sins real or imagined; and moaning about how Americans are terribly wasteful and consume far more goods and services than is necessary.
Almost predictably, one child reacted by living even more ascetically than her dad, creating problems at school where she had trouble making friends because she chastised the other children for being greedy and selfish. The other child responded by rebelling, becoming extremely materialistic and constantly telling his dad that when he grew up, he wanted to make a lot of money and have all the things that he’d been denied as a child. This parent might have been very smart about money, but he did not possess financial intelligence.
Financially Intelligent Parents think long and hard about the meaning of money in their lives.
To many of us, money represents far more than just a medium of exchange. It represents our deepest emotional needs for love, power, security, independence, control and self-worth. Money might represent a scorecard, a measure of success, a source of satisfaction or security, or a cause for anxiety, guilt or dependence. Financially intelligent parents work at understanding what money means to them because they know their relationship with money will have a profound effect on every aspect of their children’s lives.
Financially intelligent parents maintain a money consciousness. They make an effort to think about what messages they are sending their kids regarding financial issues. They don’t turn down requests for a toy or insist that their child get a job without thinking about it. They develop a reflex by which they reflect upon and question how their money decisions or responses might affect their child’s development. Obviously, they don’t do this every second of every day, but they do it often enough that they are alert for mistakes they’re making or ways their children are being adversely affected.
We’ve found that parents are more likely to think long and hard about money when they understand its enormous emotional influence.
Sociologist Louis Yablonsky points out that:
- Money often forms the basis of our self-concept, self-esteem and sense of intelligence, as well as our perceived status.
- We spend our entire time at work focused on making money.
- Sexual attractiveness is enhanced by the possession of money and diminished by its absence.
- Money is at the heart of many family fights.
- Money is a prominent feature in daydreams and fantasies.
- Money symbolizes power and autonomy.
Money, therefore, is far more than a medium of exchange, and when parents grasp that it is a symbol for everything from love to success, they take the time to think about what it really means in their lives.
Financially Intelligent Parents consider the financial education of their children a primary parenting responsibility.
Financially intelligent parents do not treat this education as something that can be taken care of through one dinner table discussion or by explaining how a bank account works. One financial birds-and-bees discussion isn’t sufficient. Financially intelligent parents view financial education as a continuing process. Whether the subject is allowances, car insurance shopping or credit cards, financially intelligent parents actively seek opportunities to involve their kids in financial learning experiences, taking advantage of teachable moments throughout their children’s lives in a variety of circumstances. It may be a small child’s innocent question about why houses cost so much or a teenager’s complaint that the fast food restaurant where he works doesn’t pay him enough. Parents see these questions and complaints as catalysts for increased financial literacy.
Prioritizing a child’s financial education sometimes means making an effort to engage in difficult discussions – a key behavior of financially intelligent parents that we’ll discuss in future articles.
For too many parents, money remains the last taboo topic. They are often far more comfortable talking about their sex lives or marital problems than disclosing how much they make or what money means to them. It’s easy to rationalize why their kids don’t need to know about certain topics such as the compromises they’ve made to make decent incomes, or to avoid their children’s questions about why their cousins have a lot more money and toys than they do.
When financial education is a priority, on the other hand, parents understand that these questions and discussions are their responsibility. As a result, they not only don’t avoid them but actively seek them out.
Eileen and Jon Gallo are the authors of Silver Spoon Kids: How Successful Parents Raise Responsible Children (McGraw-Hill/Contemporary 2001) and The Financially Intelligent Parent: 8 Steps To Raising Successful, Generous, Responsible Children (Penguin USA/New American Library 2005). Their website is www.galloconsulting.com. Portions of this material have been adapted from their books.