Kids Are Naïve About the Value of Money

kids are naïve about the value of money

Whether we like it or not – money runs society and plays a large part in life. Learning to lay the groundwork for a strong financial future does not come all at once. Instead, it takes time and a change in perspective. Understanding the value of money is an intrinsic trait we must possess in order to live an effective and less stressful life. First, let’s talk about why your kids are naïve about the value of money.

Why Your Kids are Naive About the Value of Money (The Young Child’s Perspective)

Showering your younger child in gifts throughout their life, then turning around and expecting them to be financially responsible later down the line is unfair. Enabling your child only hurts them in the long run. Yes, it may feel good to give them what they want (even if they make a fuss) but putting them in a spot later in life where they do not feel like life owes them something will help them have more peace of mind.

Sometimes, the truth is: regardless of how you parent a child, their attitude will still be selfish. Let’s take a glance into the world through the child’s eyes to understand where they are coming from in this day and age.

A child’s sense of entitlement is very normal. Ever heard of the saying “comparison kills”? Well imagine not knowing yourself and looking at what others are doing constantly. The understanding that life is better lived when you amplify your own unique characteristics is a lesson you have not yet learned. So, you would feel lost and selfishly want to do what everyone else is doing…this is what is happening with your child.

Newer avenues consistently pop up for your child to get lost in what could be theirs – observing popular kids at school, learning about the lives of others at camps and after school activities, television shows that prey on those who don’t know they aren’t real and social media that saturates the child in various lifestyles and ways of life they would never know existed previously.

Being consistently bombarded by all this leads to unhappiness and a depreciation in self-worth. Who can blame that reaction? It is psychologically true that as humans we want to be like the ‘head honcho’ and look up to that archetype. Just as we want to climb the corporate ladder to be the boss, we also want to climb the social ladder as youngsters to feel valued and powerful.

Unfortunately for us and our wallets, imitation does not meet flattery when it comes to our children seeing others being showered in presents.

Next, let’s discuss things parents and caregivers do to give their child the gift of financial literacy.

Specific Advice If Your Kids Are Naïve About the Value of Money

Trying to insulate your child from these unrealistic lifestyles only temporarily helps the problem. It will soon be met with pushback and resentment after a short period of time. When it comes to social media (in my opinion, the biggest culprit of them all) you cannot keep your child from it.

You can confiscate phones and laptops all day. But somehow, they still will find a way to watch. (Unless you lock your child in their bedroom, they will be spending time with friends outside your home.) The best tactic is to shift their mindset. Now, when they go on social media or are around others, they can see that there are more important things in life than placing your self-worth in other’s opinions of you.

Because that is the root cause of this all: self-worth. Children get hit hardest because they are new to life and do not know themselves yet. That is why it’s our job as the caregiver to build them up. Now, if they truly want that lifestyle of material items, they have the confidence to get it themselves. Allow them to discover that everything they need in life is directly inside of them. This will also put your child lightyears ahead of anyone else their age.

The Approach to Money Mindsets

The earlier in your child’s upbringing that you start integrating money mindset teachings, the sooner your child will stand on their own – fiscally and mentally.

Consistently bailing your child out of situations that are self-inflicted enables them to never feel how their actions have any actual consequence. (This applies to adult children as well!) On the other hand, allowing your child to make mistakes without being there to pick up the pieces will get them prepared for dealing with situations on their own. Put another way, allowing your child to deal with the natural consequences of their choices builds resilience. This is exciting for them and for parents! It is an undervalued skill to be able to pick yourself up from any situation and you get to help them learn this.

You can start these tactics out at a very small age. In this example, if your small child slides off the chair and has to climb back on – be watchful but do not pick them up and place them back on. Instead, give encouraging words and see how their mind works as they work out which avenue is best for climbing up the chair to regain their previous sitting posture. Though this may seem like it has nothing to do with money, it all boils down to overcoming challenges on their own (wanting something but not currently being able to afford it) and learning to have the confidence to make it happen.

This is still a loving approach. Give your child what they have been wanting after they work hard for it. Or you can help them come up with ways to get the money they need on their own. For example, you could encourage them to start their own business and pay for it themselves? When I was 15, I wanted to go on a European trip. So I sold strawberry plants and played bagpipes to earn money. Here’s the thing…studies have shown that we thrive off of challenges. Biologically we crave it, but mentally, we seem to be becoming ever more comfortable in lacking this major source of life experience. Boost your children’s drive with challenges and watch them take over.

Setting Boundaries

Setting boundaries with your child will give them the confidence to stand on their own and not look to you for extra assistance when they know they can tackle the situation themselves. This goes for fiscal situations as well. Instilling a sense of confidence in your child from a young age that they can do anything and that they are awesome will give a push that will ensure they are confident and fulfilled with or without money.

When a well-off parent dies and leaves the money to the child, what often happens is the child will blow the money and get nothing fruitful from the extra coin. Thus, going back to square one. Research shows that heirs who are unprepared to receive an inheritance are more likely to make poor choices. In other words, if your kids are naïve about the value of money, they will mismanage it when they inherit it.

If you are well off, have a comfortable life, a homogenous school with the same kinds of people around, it is best to get the child out of said environment and get to work. Allow them to understand what hard work truly is. Complacency will happen when there is no challenge in life. Getting out of the environment shows the child there is more to life than just the small bubble – and working will give first-hand experience of what it takes to win. If your teenage child is still not understanding the value of money, give them an unconventional way that allows them to see a larger piece of what the world is like beyond their small, daily radius, such as driving 20 minutes away to work and be around different kinds of people. This will strengthen the child to get out of their comfort zone, be more confident in themselves and approach social situations better due to their knowledge of all kinds of personality types.

There are multiple avenues to teaching your child to work hard that are still safe, loving and self-esteem building. Remember, if you only know easy work, accomplishment will not feel as good.

Building Their Esteem (And Resume)

Gaining money is huge in society – starting out young as little entrepreneurs can be a great segway to their future of money management. Letting them make mistakes and seeing how great mistakes can be because more lessons can be found will gain confidence. Here is a scenario that can build up your child and their business portfolio:

As a parent, you notice that every time you pick your child up from school, everyone is wearing Vans shoes. Your child has even asked you to buy them a pair and tells you that all the kids at school wear them. Here’s your chance to tell them, “Hey, I see all your friends love the new Vans shoes. You know what could be cool? If you made your own socks and tie dyed them and started a new trend at your school.”

Now their mind is thinking of this new, creative adventure that will give them a sense of belonging and superiority which children tend to yearn for. Now it’s time for the money talk, “If I give you 30 dollars, let’s break down all the costs and go from there. After we do that, you can promote the socks by creating your own Instagram page as well.”

From this scenario, your child has bought themselves new Vans from the revenue earned. Also, your child now has the confidence to start a project, break down costs and analyze potential profit, can manage money, and understands brand marketing as well as social media marketing.

Why not get your child’s resume off the ground before they need it to be? Empower the child to get up and work. This is where great success stories are made.

Final Thoughts

Teaching your child about the value of money doesn’t have to be a hardship. Challenging your mind to come up with various games and ways for your child to truly grasp the value of a dollar will be fulfilling to yourself as well as for them.

Your child loves a challenge. In fact – we all do. There is a sense of fun in re-working the parenting rule book to create money ideas and win together. Let your child know that they can get everything they want in this world, as long as they see that it all must come from them.

In some instances, they may not understand the lessons you are teaching them. But they will appreciate it in the long run. Create a safe place to let your child come to you and express their thoughts, emotions and needs. This journey of life is a lot better when the family unit is close and can communicate their frustrations and achievements.

Now, when they are off into the world on their own and applying for jobs, you can see their confidence soar because a company is asking for ‘social media management’ and it will seem like a breeze – they’ve been doing that since middle school.

Also, if your kids are naïve about the value of money, you can protect them from themselves with a properly drafted trust. Contact us to discuss this further.


Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.



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