Financial Health - How to Model Behavior at Home

A psychologist asked me to write the flip side of my last article that listed aspects of financially destructive households.

So here it goes - It's said that all happy families are happy in the same way, while unhappy ones have all sorts of dysfunction. The same applies to money. Financially healthy homes share many similar values and mindsets regardless of where they sit along the socio-economic continuum. This is Part I with Part II coming next week.

Part I - THE BIG SECRET

The Big Secret is something the biggest mouths in finance (Suze Orman, Tony Robbins, Ray Dalio, every FIRE acolyte) haven't shared. Before your kids are even old enough to understand money you have already conditioned them. So lay solid groundwork to ensure your kids trust you and recognize you as a teacher.

Five bedrock conditioning behaviors for financially healthy homes:

Trust - Through daily respectful conversations with family members about anything, this give and take builds healthy communication and lays the path for talks around heavier topics (money, sex etc). An hour around the dinner table - no screens. Be consistent and your kids will talk to you about everything. Part of Trust is walking your talk. Hypocrisy is the enemy of trust.

Recognition of Worth - You can say "My Way" but you need to explain why. The parent is an authority figure, but if you behave like a tyrant I guarantee you dysfunctional outcomes. Explanations show your child they have the right to know AND that they are worthy of the time it takes you to explain. You are saying, "I think you are smart enough to understand this." Imagine every conversation with someone in finance where you didn't feel confident enough or 'entitled' to ask..

Cultivate Curiosity over Gossip - Do you talk about The Bachelorette or current events? Do you talk indiscretions or inventions and ideas? Histrionics or history? Unless you inherited it or married it, no one gets the Kardashian lifestyle sitting around gossiping.

Demonstrate Ownership and Self-Reflection - Have you ever explained to your kids why you made a decision or took a chance on something that went wrong? Successful investors reflect on their decision making process and learn what they need to adjust going forward. They do not look to blame others or play the victim. Learn to model self-reflection and ownership.

Show an Equitable Balance of Power - Gender pay gaps - embrace the discomfort -because it starts at home with chores and attention. We devalue girls from the get go by how we treat our wives and daughters.

A healthy Balance of Power means parents support each other emotionally, they both do chores and they make joint decisions in economic matters. Put another way, the biggest breadwinner does not get the final say, get excused from the mundane or caps how much fun the family has just because they make more income.

Vis a vis children, attention is its own currency - Watch who tries to monopolize conversations, who acts out and cannot listen. Don't indulge rudeness or outright aggression. Acknowledge good listening with, "you listened really well to so-and-so today, and it seemed to help them". By reinforcing maturity and equanimity you show kids they can positively impact family dynamics. Even if the world is unfair, you can set equal expectations and give equal air time to show you value your kids equally.

Chores - How to Start with Money: There's no such thing as "girls' chores" and "boys' chores", just as there's no such thing as "girls' money" and "boys' money". It's just money. Make everyone spend a week doing each type of chore in rotation for the rest of their lives.

It is likely one parent will be better at all the above than the other(s). In this case, your job is to role model how you want the other parent to behave. It takes patience and practice.

Okay, now get crackin'. Part II coming in a week.

Andrea Kennedy, author of Own Your Financial Freedom, is a Singapore-based Certified Financial Planner and Asia's only Financial Behavior Specialist?.