Elizabeth Nam

Head of Family Dynamics for J.P. Morgan Wealth Management

One common refrain we hear from clients as their children are emerging into adulthood is that they are uneasy with their children’s money habits. But, where does a “habit” come from? Generally, a habit forms once a person does a behavior with little to no conscious thought. Children learn behaviors through observation, and parents are their main teachers. As they say, “Monkey see, monkey do.”

In our fast-paced lives, it’s easy to get caught up in wanting to complete tasks efficiently. We often take for granted all of the knowledge and learning required to complete the most basic things. There are a myriad of “teachable moments” buried in ordinary everyday decisions and activities that can help children develop financial awareness and a sense of responsibility.

A routine trip to the grocery store.

Take something as banal as your regular weekly trip to the grocery store, for example. Without even thinking, you have an objective for the trip and a plan of action. Some of you may even have a budget and coupons in-hand. One successful outcome of this exercise is being able to restock the fridge and pantry of staple items that nourish the family. Utterly prosaic, but can we transform this activity into a learning experience?

When my sister and I were young, we sat in the cart (or more often, perilously dangled off the end) looking forward to getting our “cookie club” member cookie and having our membership card punched at the bakery counter. We barely paid attention to what mom was putting into the shopping cart. How much did the milk cost? How about the cereal and breakfast sausage? Where did all of these things come from? We had no idea, and looking back, these trips to the store could have been so much more.

Children are not born with an understanding of financial concepts. They learn by observing role models and experiencing the challenges that life presents, in real time. Small victories and small failures early on can help children build confidence, muscle memory and longer-term resilience. Even a basic grocery store run can result in learning about dollars and cents, how the world works, and what it means to be a helpful member of the family.

  • A precursor to “budgeting” is planning. A productive, efficient trip to the store requires planning. Ask your kids to help you meal-plan, take stock of what’s in the pantry and manage the shopping list. In this day and age, it’s tempting to simply keep a list on your smartphone, but try to make the activity interactive by having your kids put pen to paper. Describe items as “must buy” versus “nice to have” so that the children can start to develop an understanding of what’s essential versus non-essential.
  • Ask your kids how much things cost. Children don’t know the relative cost of items they use and consume every day. Later, as emerging adults, it can be difficult for them to understand how much their lifestyles cost, and how much they will need to earn in order to support themselves at the standard they are used to. Have them keep track of the prices of the items you’re purchasing as you are putting them in the cart. Maybe ask them if there are lower cost alternatives.
  • Engage your kids in conversation when choices are being made. Why are you choosing one product versus another? Price? Quality? Health? Other considerations? Walking your children through a thought process can help them be more conscientious about decision-making. It may also illuminate important values that can help them develop their own moral compass. • Stimulate curiosity about how the economy works. Ask your child to research an interesting fact about a product they like. Who manufactures it? Is the company the only one that makes that product or are there competitors? What goes into making the product and bringing it to market? Ask your children to share about what they learn over dinner.
  • The dreaded candy display at the checkout counter. Navigating checkout with young kids in tow can be difficult with all of the colorful candy and gum on display. Resist the temptation to mindlessly throw a candy bar into the cart to appease the kids. This is a great time to flex those allowance dollars and ask the kids to make a decision: use their allowance to buy a sweet treat of their choice now, or work toward a more important savings goal. Alternatively, if the kids have been particularly helpful on the shopping trip (and they have meaningfully contributed to the success of the activity), let them know you’re especially thankful that they helped in specific ways, and reward them.
  • Pay for at least some things in cash, and ask your child to count out the cash needed to pay. The world is rapidly moving to a “cashless” economy, so learning about money has become even more abstract. If children see their parents tapping a credit card every time payment is required, they are likely to equate the card with money, rather than with indebtedness and responsibility. If they see parents using digital payment apps on their smartphone, money becomes even more invisible and intangible, yet seemingly accessible. Even if children will eventually be interacting with money electronically as they grow older, touching cash, counting it and seeing it used as a medium of exchange is critically important for understanding how money runs through one’s own personal economy. Once a physical dollar bill has been spent, it’s gone!

Showing children how to be deliberate and intentional when making spending decisions can help to reinforce the role of money as an important tool to support a healthy, sustainable lifestyle. Whether it’s going grocery shopping or making the decision to adopt a pet, engaging younger members of the family in the process can teach valuable lessons about the commercial world, and about making smart choices. It takes conscientiousness and energy, but with repeated reinforcement over time, thoughtful behavior can turn into healthy habits. Who knows? Maybe you will even see your own money habits change.

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