There’s an old saying that wealth doesn’t last beyond three generations. However, many Jewish families have maintained their wealth for over 300 years. What’s their secret? The answer lies in their approach to financial education.
Beyond saving: The depth of wealth education
Wealth education is more than teaching children how to save and earn money. It involves instilling values corresponding to material life, aiming for depth and breadth beyond financial literacy. In the past, wealth could be accumulated through frugality and savings. Today, if parents want their children to be genuinely prosperous, they must model and instill correct money values from a young age, ensuring financial and spiritual fulfillment.
The three pillars of wealth education
Professor Miles from the University of Hamburg emphasizes that modern parents should teach their children three key financial abilities:
- Proper use of money: Children should learn to manage their finances effectively.
- Handling material desires: They must understand and control their materialistic urges.
- Understanding scarcity and financial limits: Recognizing the limits of money and the concept of scarcity is crucial.
Behind these abilities lies the most critical mindset: taking responsibility for oneself and solving problems independently. Cultivating these skills in children is the most valuable asset parents can pass on.
Learning to manage money: A practical approach
Take Erica, for example. She received a few thousand yuan from the sixth grade as New Year’s money, which had to last her the entire year. This money covered everything from seasonal clothing to gifts for friends and family. If she spent it all, there would be no more.
Erica’s parents, despite being well-off, understood the importance of early financial education in combating the so-called “affluenza.” They aligned their approach with Professor Miles’ three financial abilities. Children can begin managing small amounts of money from three or four to understand the relationship between money and material goods.
Handling desires: The satisfaction of delayed gratification
Another critical aspect is helping children manage their desires. Professor Miles points out that this teaches children to take responsibility for their desires and learn the joy of delayed gratification. For instance, if a child impulsively buys a toy and regrets it later, they must face the consequences without parental intervention. This teaches them to make more thoughtful decisions in the future.
Parents can also practice delayed gratification as a family, waiting longer to buy desired items and experiencing greater satisfaction when they finally do.
Recognizing true value: Family and friends are priceless
Understanding what money can and cannot do is vital to wealth education. Children should learn that some things, like family time, are invaluable. For instance, a father might earn more by working weekends, but the joy and bonding experienced during family outings are worth more than money.
Many wealthy families encourage their children to participate in social and volunteer activities to broaden their perspectives and appreciate their good fortune. In the U.S., some parents designate a “no-spend day” to show that happiness doesn’t always come from purchasing goods.
Jewish families often attribute their long-lasting wealth to the teachings of the Talmud. This ancient text provides guidance on managing money and understanding its value. The Rockefeller family, for example, is a testament to the effectiveness of these teachings.
In addition to financial education, Jewish families use trusts to manage their estates, ensuring that resources are allocated to deserving descendants. This system prevents a single reckless heir from squandering the family fortune, preserving wealth for future generations.
A timeline of Jewish financial education
- Age 3: Children start recognizing coins and bills.
- Age 4: They learn simple calculations.
- Age 5: They understand what money can buy and how it is earned.
- Age 7: They grasp the concept of price tags and the exchange value of money.
- Age 8: They begin earning money through small jobs and saving it in a bank.
- Age 9: They can plan weekly expenses and compare prices while shopping.
- Age 10: They learn to save money for significant expenses.
- Age 12: They can see through advertising gimmicks, plan expenses over two weeks, and understand banking terms.
By starting financial education early, Jewish parents ensure their children understand the value of money and the effort required to earn it. This approach prevents children from developing unrealistic expectations about wealth and instills a sense of responsibility and gratitude.
The modern relevance of traditional wisdom
In today’s fast-paced, tech-savvy world, the principles of Jewish financial education offer timeless wisdom. By teaching children to manage money, handle desires, and understand true value, parents can equip them with the skills needed for lifelong financial health and personal fulfillment. These lessons are about preserving wealth and fostering a mindset of responsibility, gratitude, and thoughtful living that transcends generations.
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