History repeats itself unless we learn from past mistakes. Thus, each generation would like to pass on hard-won lessons to the next. Parents give their children valuable advice about school, relationships, and careers. But how effectively do we teach our kids about financial management?
Nobody is immune to mistakes when it comes to finances. Most adults you’ll ask will have had their share of blunders to regret. Some of us didn’t learn how to create a detailed budget and track expenses until we encountered problems with debt or paying bills on time. Others managed to be frugal but didn’t explore ways to build their wealth until later in life.
Yet as the children of today grow up with access to more information than ever, it’s worth considering which lessons they might have already learned from the internet. And at the same time, determine which ones they can only learn from us.
Recognizing the generational influence
Each generation is a product of the times in which they grew up. When it comes to finances, the baby boomers were able to experience high economic growth in the postwar years. They took advantage of great opportunities to invest and buy a property. This influenced their outlook on money to become very optimistic.
Over the years, however, economic conditions have become less favorable and more uncertain. Today’s biggest demographic, the millennials, grew up or started to seek employment around the time of the 2008 recession and its aftermath. Their path to financial stability has been much more challenging as a result of these circumstances. Many continue to struggle to pay off student debt. They tend to rent instead of buying homes and spend on experiences, especially travel.
Today, the cohort that’s coming of age and entering the workforce belongs to Gen Z. Like millennials before them, Gen Z has grown up in the shadow of economic recessions. First was the 2008 financial crisis. And now, the pandemic-induced recession has given this generation a harsh look into the financial future.
As a result, Gen Z is shaping up in many ways to have similar attitudes to their millennial predecessors. And it’s quite likely that if your kids belong to the even younger cohort following Gen Z, their opinions will bear similar influences due to the current economic climate.
Giving first-hand lessons
Millennials and Gen Zers are the first generations of digital natives. Unlike older generations, they routinely learn and stay on top of the news through their smartphones. They know that you need to save money to manage emergencies and plan for a comfortable retirement. They also know that education is essential, but only in terms of landing a job that provides adequate returns on such an investment.
As your child’s first and most influential teacher, you can supplement that knowledge with more detail on how to save. Sure, your kid might have the instinct of looking up anything on Google or Youtube, but it’s different from learning it from a role model.
Give them first-hand lessons with saving. Teach them whatever personal methods you have developed for financial management, from setting up automated payments to using credit card statements as an expense-tracking tool.
If you use any special techniques to minimize spending, help them to develop those same habits. You could show them how you take your damaged iPhone to the shop for screen repair instead of buying a replacement. Or how you plan and create a shopping list so that you can stick to only essential purchases whenever you head to the supermarket.
Stay on top of job trends
Savings comprise only half of the balance sheet when it comes to managing your finances. And while you can teach your kids in-depth when it comes to saving, not all parents are similarly attuned to the current job market.
Of course, once you have a stable source of income, you seldom pay attention to new opportunities or how new job-seekers are getting in. But before long, your child will be in that same position. The kids who came of age in recent years could have used some guidance from their parents in navigating the gig economy and figuring out what makes a good hustle. Not all of them received such advice.
Our kids will grow up in a different world. They might be more familiar with the latest technology and trends. Figuring things out on your own is part of the transition to adulthood. But we can stay informed too, and with our broader perspective and experience, we can point out when a job seems exciting but is only a short-term solution. Our influence can show them the opportunities that will lead to long-term career success.