The skanner. (Portland, Or.) 1975-2014, October 24, 2018, Image 8

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Newspaper Page TextPage 8 The Skanner Portland & Seattle October 24, 2018 Financial Literacy How to Teach Your Kids to Think More Critically About Money Use questions to stimulate critical thinking about money and promote financial independence By Carly Sawatzki The Conversation dvice on money often boils down to simplistic mes- sages about bud- geting, understanding compound interest and avoiding debt. But re- search suggests finan- cial decision-making depends as much on our values, expectations, emotions and family ex- periences as information taught at school. In short, the way peo- ple interact with money is highly complex and so the way we teach our kids needs to catch up. It’s time for a shift from teaching children rote- learned financial rules of thumb to instilling dispositions and a think- ing process that under- lies good financial deci- sion-making. Funnily enough, the debate over “smashed av- ocadoes” illustrates two concepts that can make all the difference to how we approach financial decisions. The first is a future orientation and the second is self-regula- tion. A Carly Sawatzki Thinking about the future, or a “future ori- entation” is incredibly important when it comes to managing money. This is a tendency to consider future consequences and a willingness to delay gratification in favour of longer term goals. Self-regulation is the process by which we control our thoughts, feelings and behaviours. Being aware of our finan- cial motivations and hav- ing the ability to critical- ly analyse our decisions is also important. These are the kinds of thought processes nec- essary for good financial decision-making. Money is a limited resource Research shows that both parental behaviour (like discussing financial matters with children) and dispositions (such as future orientation) have an impact on their children’s financial be- haviour into adulthood. This means that sim- ply discussing money can help children build financial independence by practicing making decisions. For example, parents and children can discuss what they want to do with any money they receive, and may- be encouraging them to bank and save. Giving children pocket money is another strat- egy for accomplishing this. Although not every- one has the means or the inclination to pay their children for helping out around the home. And you don’t have to. Research also shows that financial hardship - living on a limited in- come and going without – can be just as useful in shaping financial under- standings as the experi- ence of growing up rich. In fact, there are things that children observe and experience – like problematic gambling and the financial fallout of marriage separation - that can influence them to think and feel more conservatively about money. As part of my ongoing research, I have spent time working with par- ents, teachers, and 10-12 year old students. I’ve found that the experi- ence of financial hard- ship is not lost on chil- dren. During interviews some have described the importance of work- ing to earn an income. Others have told me that their parents work multiple jobs to make ends meet and money is stressful. Some children suggest- ed selling a car to save money, or competently described sophisticated economic concepts (sup- ply, demand and market equilibrium) in relation to buying and selling sec- ond-hand goods, particu- larly electronic games. These examples show that children for whom money is a limited re- source bring valuable insights to their finan- cial literacy education at school. There are ways that parents and teachers can sensitively tap into these insights during les- sons. Promoting critical thinking and financial independence We live in a world that sells immediacy and makes it easy to tap and go. Figuring out how to balance short term de- sires with longer term financial goals that may seem out of reach - like funding higher educa- tion and purchasing a home - requires focus. Ultimately, children need practice applying their literacy and nu- meracy skills to make financial decisions inde- pendently. This can take place both at home and in the classroom. For instance, instead of giving children val- ues-laden advice about what makes a wise fi- nancial decision (such as avoiding debt), use ques- tioning techniques to stimulate and guide their thinking. These could include: Reasons: What are your reasons for making that decision? Evidence: Can you con- vince me that is the best decision? Argument: What would someone who disagreed with you say? Impact on others: Will your decision affect any- body else? Consequences: What might happen next? These questions en- gage children to think about what drives them and what all their avail- able choices might be. As painful as it can be, it can also be productive to let go and allow chil- dren to experience the odd financial misadven- ture and mistake. Later, you might ask, “How did that work out? What might you do differently next time?” These questions have the potential to promote critical thinking, a fu- ture orientation and self-regulation - without seeming to be too judge- mental or interfering. Carly Sawatzki is a lec- turer at Monash Universi- ty and serves as Treasurer on the Executive of the Mathematics Education Research Group of Aus- tralasia (MERGA).