- Children learn money lessons very early on, with research suggesting it might be as young as age 7.
- Despite this, financial literacy isn’t taught in schools and oftentimes neglected at home as well. Perhaps this is one of the reasons household debt is at an all-time high — consumers never learned any better.
- To avoid future debt disasters, it stands to reason that children should learn about money while the stakes are still low.
Greg McKeown isn’t just the CEO of leadership and strategy design company THIS, Inc., a world-traveling public speaker and the New York Times best-selling author of the book “Essentialism: The Disciplined Pursuit of Less” — he’s also a father of four. And the multitude of hats he wears has given him unique, valuable insights about teaching kids financial responsibility.
The leader and dad shared some of his most profound money memories, as well as some of the financial values he and his wife are sharing with their kids. Keep reading to discover an entrepreneur’s take on children’s financial literacy.
What do you remember your parents teaching you about money as a child?
One of the first memories and lessons I had on money was a practical one. My family set a goal to travel to Europe on a family vacation. We needed to earn and save money to do it. The entire family chipped in. Each of us was responsible for contributing toward the goal.
One idea we had to earn and save money was to start a car washing business. We knocked on doors to see if people wanted the service. We did it a few times before everyone lost interest in carrying on, except me. I was interested in carrying on.
I was ten years old. I liked it. It tapped into these immense entrepreneurial feelings hidden and previously unknown to me. I thought, “This is something I can do.” So, I kept at it.
The biggest barrier for me wasn’t approaching people — it was washing the cars. I was too short. Reaching and washing the tops of cars wasn’t easy. So, I had to have my brothers and sisters help me to do it.
The experience had many meanings for me. One of the big lessons was recognizing earning money is often thought about in units, like dollars or pounds per hour. But that is not the best way to make money. It is a safe way but limiting. This became very clear a few years later when I took a job delivering newspapers. I did this in addition to running my car washing business.
My paper route paid me maybe one pound per hour, which then was roughly less than two dollars. That was hard work. You had to get up early in the morning and bind your papers, then deliver them. Often it was cold. And, it wasn’t like the American home newspaper delivery system where you can toss papers onto a porch or driveway. You had to place the papers in a letter box in the door. The mail didn’t fit easily into and through those boxes.
It didn’t take long for me to figure out in the same amount of time I might be able to earn more money. I remember thinking distinctly to myself, “I can sell this hour of time for a set amount of money on my paper route, or I can sell a service like my car wash business and possibly make lots more money in the same time.”
That lesson has proven valuable repeatedly for me as I have gone through my life and financial journey. Which unit are you measuring your contribution in? Are you measuring it by the hour? Or are you measuring it by the service? You then want to constantly try to upgrade the value of the unit.
In summary, I think that entrepreneurial experience at 10 years old is still the single most important experience and financial lesson I have had in my life, even though I have had many more experiences since then. I learned how to make money. I learned how to value my time. I learned to budget. I learned to save.
What is the most important money habit you learned as a child that kids should learn today?
The topic that was most public in our family conversation around money was the importance of tithing. We knew our parents tithed. So, we all did. We fully tithed. There was no pretending. Of every pound I earned, I tithed ten percent. Other than tithing, my parents did not talk about money in detail.
On the other hand, my wife and I talk to our four children about money. We want our kids to learn to manage and steward money while they are young. One of the important books we read on the topic was, “The Opposite of Being Spoiled” by Ron Lieber. We really liked some of the suggestions in the book. One of the ideas that made sense to me was having kids learn about money and make their mistakes with it while the risks are low. Thus, we are teaching our kids basic concepts like how to save, spend, tithe and work hard. Those are the essentials when comes to money skills.
If you could only teach a child one money habit, what would it be?
I would teach them to be good stewards. From my world view, I believe we are answerable to God. Hence, I will have to give an accounting for myself, including my financial choices. That guiding principle helps me understand I need to spend wisely and give back. It helps me to recognize I am not alone. I need to think about other people when making financial choices, like family members and those in my community.
At around what age did you realize “money was money” — that it had value?
Certainly, by age ten. And, it probably was earlier than that. We did not have a lot of money. I can remember only having pocket money maybe one time prior to starting to work for myself. If I wanted something like “trainers,” we call them tennis shoes here in the states, I had to go earn and find that money.
Although I am sure I would have preferred to be given the money, in hindsight, I’m glad I had to go and earn it. Sometimes we stifle people’s drive and creativity by giving them everything they want.
What was your biggest money mistake as a child or teenager?
Only a couple of mistakes come to mind — but they still burn me.
One, I was given three pounds in coins from a relative. I wanted bills instead of coins. So, I got the bills and promptly lost them. That always hurt. Just the waste of it hurt. It is something I have never forgotten.
And the other experience was really foolish. I was in the city center where I lived, and there was a crowd of people gathered in front of one store. I went to see what it was all about. There was one person talking to the crowd. Basically, it amounted to a con show. He was talked to the crowd and peppered them with questions. He would ask something like, “How much would you be willing to pay for me to give you this number of items in this box?”
And, at the same time he would be stuffing the box with lots of electronic products. He just kept talking and stuffing items into the box. I was thinking this whole thing seemed a bit off, but I didn’t leave — I stayed. And, eventually I got caught up in it.
I paid five pounds for the box, which at the time was a lot of money to me. Several other people did the same. I don’t remember the exact details other than this: no one got anything for their money. Everyone just kind of groaned and left. I remember I returned to the store to try and get my money back and they pushed me right out the door.
That hurt bad. Real bad. And it wasn’t really the money. It was that I knew better, yet I did not leave. Greed got to me. It took me over. I tried to get something for nothing.
What was one of the smartest money decisions you made as a child or a teenager and why?
As a teenager, I saved a considerable amount of money to go on a church mission. I was pleased to be able to fund a good solid chunk of the trip myself. It built my confidence and esteem.
Did you hold a job while you were in college? And, if you did, did you find it to be a positive or a negative experience?
Yes, it was terrific. Mostly, I was fortunate to perform work that was in alignment with my professional aspirations where I could teach and train others. However, there was a short period where I worked in a furniture store. That didn’t have anything to do with any career aspiration I had.
What would you say are the primary reasons parents find it difficult to talk about personal finance with their children?
I don’t think people find it hard to talk to their children about money. I think people find it hard to talk to people about money. I think the subject of money remains taboo. We talk about it in generalities — specifics are another thing. It can be embarrassing for people to say, “This is where we are in financial terms.” Sensitivity around money is probably what the real issue is. One reason I am hesitant to share financial details with my children is a concern they will share those details with other people.
Now, what I think is strange, even as I say this out loud, is people sort of know where people are at in financial terms. I mean people are sizing up other people all the time. For example, inside corporations, people estimate what their colleagues earn. They ask questions like, “What car are you driving?” “Do you own a home?” “Where is the home located?” And, if people want to figure things out further, they look online. It is a fun game that goes on. It gives people a pretty good grasp on things, but it isn’t something they want to talk about openly.
If people are off-put and stressed by the subject of money, they will want to avoid it all together. This would include talking to and teaching their kids about the topic.
And then there is this: money is a highly emotional subject for people. It is at the core of so many life decisions. Money can be as emotional as people’s sense of limitation in their lives.
What are your favorite books on personal finance? And, is there one lesson that stands out from the book?
David Bach’s “The Automatic Millionaire.” It had an immediate impact on me. The idea you can automate your finances and stop thinking about them was a concept I wanted to take advantage of.
Research from Cambridge and Purdue universities reveals that adult money habits are likely established as early as age 7. Do you believe more personal finance should be taught in schools?
The research means you are learning before you are aware you are learning. You do this through observation and listening. It happens with language and gestures. I am sure it is true children are absorbing spoken and unspoken truths and ideas about money from very early ages.
It also means talking about money openly is important. And, yes schools should play a part in the discussion and financial education of children. But it probably should be taught more at home than anywhere else.
Click to read more about things today’s kids really need to know about money.
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