‘I want this one.’

My 2.5-year-old daughter was pointing to a plastic stool with Winnie the Pooh on the front of it. Price: $14.

Next to it was an identical stool – same size, shape, colour, everything – but instead of Winnie the Pooh, it had a grey star and ‘I’m a star’ written on it. Price: $5.

With my first thought, I mentally cursed the store, then marketing people everywhere. They did this on purpose.

With my second thought, I reflected that my daughter is like a sponge. She is being subconsciously programmed by whatever I do or say till she’s seven, and maybe beyond. I better do and say the right thing here.

By this point, one second has passed. My daughter has picked up the Winnie the Pooh stool and is headed for the check out. I grab the $5 version and follow her.

I catch up to her and explain that I’m not buying the Winnie the Pooh stool. It is $14, and the one I’m holding is just the same but only $5. I could buy two of my stools for the same price as one Winnie the Pooh one and still have enough money left over to buy a loaf of bread. I ask her to put it back.

She stares at me blankly, then carries on her way to the check out, still holding the stool.

In line to check out, I continue explaining: I understand she wants that stool, but I’m simply not buying it. It would be a waste of money to do so. If she has her heart set on the Winnie the Pooh one, I’ll buy a sticker of Winnie the Pooh and put it over the star.

Again she stares at me. ‘But I want this one’.

I reply: ‘I know. But we’re not buying it.’

We repeat this conversation three times before our turn comes to check out. I’m gritting my teeth, holding my breath and preparing for tears…

But Mum, I’ve done the math. There’s room in our budget. Why can’t I have it?

We’ve all been there, right? That’s why they created confectionary-free checkouts – parents were sick of the inevitable ‘I want this chocolate!’ showdown every time they queued for groceries. We’ve all got our script, like the bedtime ‘no-more-drinks-or-stories-or-songs-just-go-the-f*ck-to-sleep’ one: a list of rational reasons we provide for why we will not be buying what your child says they want right now. Sometimes it works. Sometimes extra persuasion (e.g. bribery or ‘Because I said so’) is needed.

So what’s your script when money is involved? Do you know what you’ll say before the question ‘Can I have this one?’ is asked?

Thinking that I’m overthinking this? Guess again…

Why is this important?

Last weekend I went to a marketing course. The presenters unexpectedly did a section about our mental baggage about money. Needless to say, I was delighted – this is, after all, one of my favourite topics.

At the close of that session, several people shared their ‘breakthroughs’.

One woman spoke about believing she had to go into debt to own anything because that’s what her parents said and did: they used credit cards and loans almost exclusively. They told her she could have anything, but she had to get it on credit. She literally saw her credit card as cash.

The new car? I just put it on the credit card, kids. It’s totally the way to go…

Another woman spoke about her belief that she could have money, but only if she worked hard for it. She had inherited her father’s strong work ethic and she was working hard, but she wasn’t getting enough money and she wasn’t sure where she was going wrong.

Similar stories popped up around the room – conversations with family about being poor, not being able to afford what they wanted, feelings of deprivation. In every case, it came back to a belief they’d inherited from their family. It may have lain dormant in their subconscious for decades, but it was there and it was shaping their beliefs and attitudes around money.

Can you imagine the cost of this?

How much has each individual foregone – financially, mentally, emotionally – because of these limiting beliefs? It could be hundreds of thousands of dollars or more. Thoughts like these have the potential to destroy relationships, hinder careers and cause untold stress in everyday lives. That’s an expensive piece of subconscious programming.

I bet none of those parents intended for that programming to be there.

They thought they were doing the right thing. How could they know these conversations and throwaway comments would shape the lives of their children so seriously and well into adulthood?

Further, for each individual, knowing they have that programming in their heads is just the first step. Now they’ve got to do something about those beliefs. Undoing all that subconscious programming will take time and energy, and there’s no guarantee it will be successful.

I’d be exhausted and overwhelmed just thinking about it. Clearly it would be much better to get the programming correct in the first place, right?

Of course it would.

Knowing this, you have a golden opportunity:

You can consciously influence that programming in your child
the way you want it.

That’s why the conversation I was having with my daughter about a $14 stool – and the conversations you have every day about money with and near your children – are so important.

Children learn what they live

When I was growing up, my mother had an abridged version of Dorothy Law Nolte’s poem ‘Children Learn What They Live’ in her wall. Here are two lines so you get a taste for it:

If children live with shame, they learn to feel guilty.
If children live with encouragement, they learn confidence.

In other words, the example you set is the behaviour your child will inherit from you.

It’s the same with money.

Our kids learn about money almost peripherally. It’s handled daily, used in transactions like grocery shopping, getting petrol for the car and buying those babycinos they all seem to love. The way you think and talk about money is rubbing off on them, whether you like it or not.

You might get a look like this if you try a formal approach with young kids. No need to go there.

When they grow up, how do you hope they will think about money?

Now reflect on what you’ve said about money recently around your kids. Does it match with your hopes about how they’ll think about money? Or is there a gap?

It’s important to be deliberate about how you speak and act about money. As I learned from the attendees at the marketing course, your words and actions will stick around in your children’s brains.

What words and actions should you use?

Now to the crux of the matter: knowing you can shape my child’s point of view on money, what words and actions should you use to do so?

This is where it can become complicated.

What you say and do will depend on what you believe and value around money. This can differ vastly from person to person.

For example, take the seemingly straightforward topic of donations and giving:

• Person A values giving. They may set aside 20% of their gross salary – perhaps their time too – to donate to causes they believe are worthy.
• Person B doesn’t value giving. They may decide not to donate any money to charity, believing the money would be better spent sending their child to university.
• Person C values giving, but thinks he/she can do better. They may decide to defer giving, believing they can make more of the money than a charity, preferring instead to donate when they have billions of dollars rather than mere hundreds (case in point: Warren Buffett).

With three such vastly differing points of view, it would be impossible to recommend a set a words or actions that teaches your child about giving in a way that would satisfy these three hypothetical people.

So I’m not going to try.

Just know that what you say and do around money is what you’re teaching your child. Make sure your beliefs, words and actions are aligned accordingly.

What words and actions do I use?

As you would expect from someone who teaches people about money, I’ve given this some thought. To help you get going organising your own thoughts, I’ve outlined my thinking below. Feel free to borrow it at will.

I started with what I’d like my child to understand about money when she grows up, specifically:

• We don’t waste money – just like water or food, it’s a resource for our use. We need to use it wisely, regardless of how much or how little we have. Being effective is important.
• For every dollar you spend, you give up something – i.e. there is an opportunity cost to your spending. How you allocate your resources (in this case, money) is a choice and should be a deliberate one.
• Money is a tool – it’s only valuable for the choices it gives you. Mindless pursuit of money for it’s own sake isn’t helpful and likely not meaningful.

These are my beliefs, which I have inherited from watching my mother and father – two very different people when it comes to money – and building on them from my experiences. Yours may well (in fact, are likely to) be different. Regardless, this is how I link what I say and do to these beliefs:

Let’s start with the words I use.

You’ll never hear me say ‘We can’t afford it’, because it’s not true. We can probably afford whatever we want – even the $750K car my husband drools over as it passes us on the street (don’t ask me what type of car, I’ve no idea even though he tells me what it is every time we see it). Yes, it would be a stretch. Yes, we’d have to give up something else – like maybe a roof over our heads. But we could afford it.

We just choose not to.

It’s the same with the Winnie the Pooh stool. Of course we can afford a $14 stool – I spend more on a single lunch at the corner store. That’s not the point. To buy it when an identical stool is available for $5 is wasteful, so we don’t do it.

That’s why I didn’t buy the Winnie the Pooh stool, and I talked to my daughter about what the equivalent value (i.e. two stools plus a loaf of bread) and waste instead of ‘we can’t afford it’. I often offer choices: ‘You can have this toy, or we can go to the indoor play centre.’ I’m trying to build an understanding of opportunity cost without having to explain economics to the poor child.

Now how about what I do?

Words may be important, but you can rest assured your children will remember what you do more than what you say. I know this because even though both of my parents told me about the dangers of smoking, my father smoked so I took that as implicit approval to do so myself. Don’t worry, I stopped over a decade ago. But you get my point – ‘do as I say, not as I do’ is blissfully ignorant thinking.

Apart from not caving to my daughter’s desires for the Winnie the Pooh stool, you may think my $14+ lunch is a sign of reckless spending. It is, in fact, quite deliberate.

In our household, we put a high value on lifestyle: quality food, good health and awesome experiences. I won’t hesitate to spend a grand on a fabulous activity we can do together on the weekend, and I’ll drop $100 on a picnic lunch with gourmet cheese and the freshest produce available on your average Thursday. During mini-retirements, I have a weekly 90-minute massage with the best masseuse I can find. We bought a small, older house in an incredible location (walk to river, short drive to beach, 300m from fantastic primary school) so every day feels like a bit of heaven.

This is, in our (mine and my husband’s) opinion, money well spent.

We don’t put a high value on things.

I drive a 2002 RAV4 with 250K+ km on the clock, and I will continue to drive it until it becomes more expensive to repair than to replace, or it becomes unsafe. Our leather armchairs came from the curbside collection, as did our kitchen stools, dining suite and a number of other household items. Aside from a bouncer, a car seat and a mattress, everything my children had as toys and essentials as babies was either gifts or hand-me-downs. My daughter just got her first tricycle… from curbside collection. Are you spotting a theme here?

We do this because we simply don’t derive much happiness from stuff. Perhaps having moved 18 times in 13 years has been instrumental here – you like a couch less and less if you have to wrangle it up and down stairs every 6 to 9 months while trying to preserve the paintwork.

So what happened in the shop?

To her credit and my eternal gratitude, when it came my turn to pay, my daughter handed the Winnie the Pooh stool to me – with barely a pout – so I could leave it with the cashier to put away. We headed out on our merry way to do the grocery shopping. I was reminded several times to find a Winnie the Pooh sticker, which unfortunately they didn’t have in the grocery store. We agreed I would keep looking somewhere else on another day.

No tears, no tantrums, no fuss.

Perhaps that subconscious programming is kicking in already…

What comes next?

Download our Free Financial Resources

Find the right Money School Course for you

Get the Book: Money School, Become Financially Independent and Reclaim Your Life, Lacey Filipich

Got a question: Contact Us

Lacey Filipich is the co-founder and director of Money School. She helps parents raise financially savvy kids and helps adults get on top of their finances. Connect with her on LinkedIn and follow the Money School Facebook page to learn more.