The True Cost of Happiness: The Real Story Behind Managing Your Money

Chapter 8. Teach Your Children Well

Three themes have come up consistently in my research and reporting about teaching children about money:

1. Example

2. Experience

3. Communication

Planners across the board say children's deepest impressions about money will come from what their parents and caregivers do, much more so than what they hear them say. The old "Do as I say, not as I do" theory does not cut it when it comes to teaching children lessons about money.

That makes it imperative to set an example by conducting your own finances in ways that are consistent with the values you want to impress upon your child.

It is up to parents and caregivers to create real-life experiences for their children. They must create opportunities for them to learn about spending, saving, investing, philanthropy, etc. At this point in time, the majority are not learning these things in school.

Communication entails a lot more than just making broad generalizations about financial behavior.

A real understanding of the family's values, goals, and actions surrounding money must be present if the child is to adopt the beliefs and behaviors the parents and the caregivers feel are most important.

If you value living within your means, for example, make sure your child understands why you think it is important, as well as the consequence of not doing it. This will go a lot further than simply telling them: "Don't spend more than you make."

Adults also need to be clear and united on the financial lessons that they think are ...