Sunday, April 25, 2021

Money talks – Home education


[Balancing money and a potato*]

There is nothing like innocent questions from children to cause us to consider our values. Recently, I told my adult daughter that I had sold my car. She immediately and straightforwardly asked “for how much?”. My equally immediate and straightforward answer was “none of your business”. Not for the first time, I was forced to consider the nature, background and correctness of my responses, this time in regard to financial education.

Attitudes are a matter of spectrum. On the subject of family finance, on one end of the spectrum are those parents that do not discuss any money issue in the presence of their children, often on the grounds that children should be protected from this type of stress and worry or in the belief that children are not capable of understanding such matters. On the other end are families that discuss everything at the kitchen table from the nitty-gritty price negotiations in their business to the challenges of staying within the monthly budget. These parents believe both in the virtue of the knowledge and their children’s capacity to dealt with these facts. In between are various degrees of openness about the process and numbers of financial management.

The background of these attitudes includes parental attitudes, immediate circumstances and cultural norms. Clearly, if parents never discussed their salary or the monthly budget, children require a great effort to change the approach when they become parents themselves. In my case, I never knew nor would never ask how much my father was earning or how much they paid for their car. Of course, diffcult circumstances often force parents to discuss finances with children especially when negative events force a radical reduction of the budget. During the Corona crisis, countless families had to sit with their children of all ages and explain why and how spending had to be cut to the minimum. A major factor in financial openness is the attitude of the surrounding culture. Israelis are one of many cultures that enjoy the game of “downsmanship”, i.e., wanting to know if they purchased an item for less. Therefore, it is natural for most Israelis, including my daughter, to say two things upon hearing that someone purchased something new: tithadesh – congratulations on a new item, and "how much did you pay". This behaviour would be extremely rude in many local societies. For example, according to my parents, in the 1960’s such questions were considered faut pas in New York but perfectly acceptable in Los Angeles. So, our total environment determines our approach to discussing finances.

An interesting issue is how parental attitudes affect our children. Clearly, “protected” children have less stress about money during childhood but often lack basic budgeting and negotiating skills when they become adults. They then take a crash course in financial management and sometimes do crash. An extreme example of this was Japanese women, at least in the past, who were encouraged to remain childlike even in young adulthood but were expected to manage the entire family budget when they got married. By contrast, children that learned about budgeting and negotiation throughout their childhood not only are more equipped to find better deals but often enjoy the process. The question is whether the concomitant stress is emotionally beneficial to children. Clearly, financial discussions in the presence of children do have an effect

Preparing children for life should involve giving them the tools to manage their finances. Ignoring such vital matters (like ignoring sex) can lead to disaster. In my view, at minimum, parents should teach their children to value money and stay within budget.  Beyond that, it is a matter of individual judgment. In any case, children are our mirrors, whether we like we see or not.

* Picture captions help the blind access the Internet.

Picture: Image by <a href=";utm_medium=referral&amp;utm_campaign=image&amp;utm_content=1015125">Steve Buissinne</a> from <a href=";utm_medium=referral&amp;utm_campaign=image&amp;utm_content=1015125">Pixabay</a>

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