What is Financial Psychology? Why is it necessary even for you? And more importantly, how do you take the information from this blog, teach it to your teen & develop their Financial Psychology?
We answer all three questions below, making starting easy for you and your family.
Question #1 - Financial Literacy: What is Financial Psychology?
In its sweetest and most straightforward form, it studies why we do what we do with our money. Give this some thought-Why do you do what you do with your money? Some adults live above their means for instant gratification, others like material items, & others are highly frugal for their reasons.
Whatever your reason, acknowledging why you do what you do with your money and writing it down is the first step to teaching Financial Psychology to your teen.
Question #2 - Why is Financial Psychology critical?
Making more money will not solve your problems; it only exaggerates your habits. I have had client after clients say, "If only I made more money, I would be better off." While this is true as a blanket statement, unfortunately for many, "more money means more problems." We must first fix the root cause of why money escapes us!
"Chains of habit are too light to be felt until they are too heavy to be broken." – Warren Buffett
I did not grow up having a healthy relationship with money. I was not taught financial literacy directly; however, indirectly, I was absorbing money lessons from the adults around me. I remember a time in my early 30s when I spent $1,017 on groceries in one day. In a household of only 3threemembers.
Upon arriving home with a car full of groceries, my son asked me, "How much did I spend today on food and why? I told him the truth as I pondered my why. After a few minutes, I admitted to growing up poor and seeing my parents at the register putting back food we could not afford. As an adult, a huge part of me still refuses to return food to the supermarket's shelf.
However, I have learned to break loose from this chain of habits by creating a grocery list and a reasonable budget and sticking to both while in the supermarket.
Question #3 - How to Teach & Develop Your Teens Financial Psychology?
Finished thinking?! Do you know why you do what you do with your money? Once you have your answer, this is where you begin teaching. Speak your money transactions out loud to your teen and be transparent about your good and bad money habits. Please take a moment to write them down because the more you acknowledge these habits, the easier they become to fix. Exposing yours is the best way to develop your teen's Financial Psychology. Let your teen in on this incredible journey with you!
For more at-home activities, check out our activity book available on Amazon!