How childhood habits shape your relationship with money
Our upbringing and childhood experiences largely inform our present financial behaviours.
“Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behaviour is hard to teach, even to really smart people,” wrote Morgan Housel in his book The Psychology of Money.
It is arguably true that our relationship with money is largely anchored on our upbringing. How?
A child who is introduced to the concept of money and its value early in life will have a different experience with it in adulthood than one who is not.
Children who grow up observing their parents stick to a budget will most likely follow suit once they come of age, and those who are rewarded with an allowance – not pocket money – learn the value of money and the importance of hard work at an early age; the promise of a reward after a chore incentivises them to do a meticulous job.
Unfortunately, most Kenyan children are not exposed to money concepts such as personal finance, saving, debt and investing early in life. Conversations about money are akin to taboo in most households, leading to their introduction in school, which ends up forming the basis of their attitude towards it.
Anthony Kuria learned about money and personal finance as an adult and is keen to break the cycle with his two-year-old son by teaching him the lessons early. A toddler, his son may be too young to understand the value of money, but Kuria doesn’t believe it is too early to introduce him to it.
“My son is two years and three months old, but he has his own savings account (a piggy bank), where he saves Ksh 40 each evening.” And when he forgets, his son toddles to the piggy bank with him in tow, where Kuria has to deposit the Ksh 40. This is not a reward but a lesson. “It’s a measure I have put in place to socialise him about the importance of saving. I want him to view savings as a normal thing,” Kuria adds.
The majority of Kenyans learn about money as a math-based field using data and formulas from teachers and lecturers. But most financial decisions are not made on spreadsheets or in boardrooms. They are practical, everyday lessons that Kuria had to teach himself.
As an adult, he’s learned that financial decisions are made at the dinner table at the end of the day and during social gatherings with family and friends. However, over the years, he’s also picked up lessons from other cultures, which he is implementing in his life. Lessons he will impart to his son.
“I learned about money from Jews – they have some of the most brilliant minds. From a young age, they are given five jars labelled tithing, savings, investing, giving and offering, and spending.”
According to Kuria, Jews begin imparting lessons on money to their children as soon as they can talk. This forms part of their culture in what is called The Discipline of the Jewish 5 Jars: when a parent gives his child ₪10 shekels, he is expected to put ₪5 shekels in the spending jar, ₪2 shekels in the investing jar and ₪1 shekel each in the remaining jars. The child only opens the giving jar on Sundays and the one labelled tithe on month ends. He opens the savings jar only on special occasions, such as when the family has a crisis and the investing jar only when it’s full. The child takes full charge in deciding when and where to invest the money he has accumulated.
The parent doesn’t intervene in the ways the child spends his money, even when they make mistakes. This spurs the child to become a creative decision-maker who takes ownership of their mistakes which they learn from. Kuria plans to use this tradition, which he believes is a remarkable lesson on responsibility and money when his son turns five years old.
“Five is the best age to start teaching him about money as he’d have understood the basics, he’d be able to tell different coins and their values,” says Kuria. Conversations on money won’t be taboo in his household either. At that age, the car wash business owner plans to start taking his son to work with him, and as he grows older, discussions about money will form part of everyday life.
Past experiences also shape our relationship with finances as most people who grew up in hardship may not splurge even when they land a well-paying job with healthy perks. For example, spending an extra Ksh 100 on the grocery budget may be a stressor that can lead to money fights with spouses.
According to Rachel Cruze, writer of What are Your Money Tendencies? “It might drive you crazy and start a fight when your spouse splurges on, say, the cage-free, organic eggs (instead of the cheaper) white ones. You might argue that the (few shillings) could go toward something else.”
Having grown up in a household where borrowing from Paul to pay Peter was the norm, one is likely to end up carrying the habit into adulthood. However, if you were lucky to have learned the transformative lessons on money early in life, you can pass on the knowledge, leaving the next generation with one of the best investments in life.