The different backgrounds of adults tend to influence their spending and saving habits. Children thus may see adults using and spending money quite differently. As a result, children may become confused about money and its uses. Be aware of the background of different generations of adults, especially your own, so you can explain to your children why there are so many views about money.
One group of adults, for example, grew up in the Great Depression of the '30s. Because money was very limited then, family income was spent to meet the needs of the entire family, mostly for food, housing, and some clothing.
Another group of adults grew up during World War II, when money was much more plentiful, but when there were few consumer goods to purchase since factories were producing war materials. Much forced saving took place during this period, followed by spending for many consumer goods as they became available in the late '40s and the '50s.
Another group of adults grew up in the '50s and '60s, a time of relative affluence, as technology made it possible to produce appliances, equipment, and recreational items undreamed of by older generations. Some of these adults, who first began working in the late '60s and early '70s, reacted to political unrest in the world and emphasized less materialism.
Still another group of adults grew up during the '70s and '80s when an individualistic attitude was in style. People were concerned about providing for themselves first. Relative affluence continued to increase along with availability of goods and services. The service economy developed, with many more jobs for teenagers. One result was premature affluence; teens had more available money to spend on wants and were not required to spend on needs. Consequently, many teens moved into adulthood with unrealistic expectations for spending.
Regardless of the generation, the major part of family income has always gone to meet family needs. However, with family income considerably higher today than it was even a generation ago, many parents can spend more for their own wants and also give their children more money. This means that you as a parent have a bigger responsibility than your parents did to help your children develop desirable attitudes toward money and other resources. Your job is complicated even more by the pressures from advertising and your children's peers.
Modern banking and business practices can also complicate your job. For example, you may be like many people who don't use cash very often. You usually write checks or use credit cards. As a result, your children may be very confused about money. They may feel that checks and credit cards are a never-ending supply of money. Also, the greater availability and use of credit may tempt you and your children to buy things that others are buying.
And don't forget, there are many more things to buy and many more choices to be made in the market today than when you were a child, or even a few years ago. The ever-expanding number of things to buy makes it more necessary than ever for you, the parent, to help your children learn how to choose what to buy, how to buy it, and when is the best time to buy.
You've had years of practice in spending money. If it's been a good experience, if you've practiced good choice-making, and if you've been able to live within your family's income and are reasonably happy, then you're probably making wise use of money as a means to an end. Pass this knowledge on to your children.
Although historical forces and peer pressures may help form a person's view of money and its uses, parents still play a major role in determining how a child will manage money as an adult. In one of our research projects, we found that the practices parents followed with their children on allowances, payment for household jobs, financial plans for education, and financial decision-making were similar to those that their own parents had followed with them. Clearly, to change any cycle of undesirable practices, parents must consider their own attitudes and what practices they want to follow with their children.
To teach your children the proper use of money, you need to set a good example. Your actions and attitudes should reinforce your teaching. One complaint often made by young people is that their parents and other adults tell them how they should do things, but then the adults don't follow their own advice.
We also know that there are many things we can have without spending money, but we may have failed to communicate this awareness to our children. We emphasize our possessions--a new car or boat, a bigger house, more and better appliances, and the list goes on. Perhaps without realizing it we have given them the wrong impression by thoughtlessly using such phrases as "money talks" and "the almighty dollar."
We may have assumed that the quality and quantity of our purchases are determined entirely by the amount of money we have, when in fact they are partly determined by our management ability. Perhaps we have been overly concerned about our social position, believing that it depends solely upon our income.
Keeping in mind the positive side--what we can do with our money rather than what we can't do--will help keep our own attitudes pointed in the right direction. Try to keep in mind that money is one means--but only one--you can use to get what you want out of life. Then you will be able to communicate this point of view to your children.
You reinforce your teaching when you meet your children's needs for approval and love. Just as emotionally deprived adults sometimes spend money as a substitute for affection, so do children. Insecurity and anxiety may lead children to overvalue possessions, especially money. They may even turn to stealing.