How to raise financially responsible kids

Mary Halton — Mon, 30 Nov 2020 19:09:04 +0000

Raúl Soria

Teaching them about spending and saving is good, but our lessons need to go beyond that, says financial planner Ellen Rogin.

Anyone who’s ever heard a child say a very grown-up word they definitely didn’t learn in the classroom knows that kids are sponges for adult behavior. And this applies to money, too.

“Kids hear how we talk about money, they see how buying decisions are made, they notice how we react to financial situations. They’re always watching, absorbing our stress and our attitudes. Even if we don’t talk about them,” says Chicago-based financial expert Ellen Rogin.

Which means how our children will manage money in the future is being shaped by the atmosphere around finances at home right now. Most parents are quick to teach their kids about concepts like saving, investing and shopping for bargains. These kinds of lessons are necessary, says Rogin, but they’re not enough. “We’re missing the opportunity to truly cultivate those skills to help our kids … to have a healthy relationship with money.”

The missing pieces are gratitude and generosity.

“One of the best ways to lower anxiety levels about money is to focus on what you’re thankful for,” says Rogin. Her family began a daily gratitude practice with their children when they were young. Each night before bed, they each share five things they are grateful for.

Even though it’s not directly about money, Rogin believes this can change how they think about finances. Gratitude, she says, “moves our attention towards what we want as opposed to what we don’t want, and directs our thinking [away] from scarcity.”

Learning to give is also important. Encourage them to use some of their money to contribute to causes they care about, and show them how you decide your own charitable donations. And show them that giving doesn’t have to mean sending cash; spend an afternoon with them volunteering at a park cleanup or walking dogs at a shelter, take them with you when you drop off unwanted books or clothes at the thrift shop, and tell them about volunteer work you’ve done in the past.

By cultivating gratitude and generosity in your kids, you’re teaching them that money is about so much more than getting, spending or holding onto.

You might not see the effects of these lessons for years, but trust they’ll have an impact. Rogin says, “Imagine a world where people are confident instead of fearful when they talk about money… where we’re focused on what we’re thankful for instead of what’s lacking in our lives.”

Watch her TEDxSevenMileBeach talk here:

ABOUT THE AUTHOR

Mary Halton is Assistant Ideas Editor at TED, and a science journalist based in the Pacific Northwest.

This post was originally published on TED Ideas. It’s part of the “How to Be a Better Human” series, each of which contains a piece of helpful advice from someone in the TED community; browse through all the posts here.

Here’s why you shouldn’t put all your trust in online reviews

Bart de Langhe — Mon, 16 Dec 2019 16:58:43 +0000

Melissa McFeeters

The bad news: Online user reviews don’t really match up with performance reviews, says behavioral scientist Bart de Langhe. But that means there’s also good news: We can stop obsessing over them.

Online shopping has brought tremendous convenience — but it’s also brought us a staggering number of options. Burdened as we can be with too many choices, it’s easy to feel like online reviews and ratings from other consumers can provide us with a crowdsourced pool of good information about the product we’re considering.

But is it the most reliable information?

Bart de Langhe, a behavioral scientist and marketing professor at ESADE in Barcelona, Spain, was led to ask this question after he went shopping in a store for a car seat for his newborn son. He faced a dilemma: Should he pay $300 for a car seat from a well-known brand that was highly recommended by the store’s salesperson, or $50 for a car seat from an unknown brand? Like many of us, he found a quiet corner in the store to take out his phone and read through online reviews. Since they were largely positive for the $300 car seat, he bought it.

Later, he wondered: Do user reviews on the car seats line up with the kind of objective tests that independent product testing organizations like Consumer Reports do? To his surprise and dismay, the answer was no. According to Consumer Reports, the $300 car seat received a significantly lower score in crash protection and ease of use than the $50 car seat did.

de Langhe collaborated with colleagues at the University of Colorado in Boulder to run a large-scale analysis comparing online reviews with performance reviews. They did this for 1,272 products in 120 categories — including car seats, bike helmets, blood pressure monitors, headphones, sunscreen and smoke alarms — which could be objectively assessed. In a study published in the Journal of Consumer Research, they found that even though a correlation existed between products that were positively reviewed online and those that performed well, it was an extremely weak correlation.

As he explained in Science Daily, “The likelihood that an item with a higher user rating performs objectively better than an item with a lower user rating is only 57 percent. A correspondence of 50 percent would be random, so user ratings provide very little insight about objective product performance.”

Instead, “there are many products that get high ratings but perform poorly, and there are many products that get low ratings but perform very well,” he says in a TEDxESADE Talk. Why does this happen? The existence of fake reviews is one reason. What’s more, people’s reviews are swayed by factors such as brand reputation, packaging and price (even though they may not realize it), and only a small subset of consumers — the ones holding the most extreme positive and negative opinions — tend to leave reviews. The latter causes the proliferation of 1- and 5-star reviews that we often see on products, while a truly random sampling of consumer reviews would likely generate more 3-star responses.

de Langhe’s conclusion: “I recommend you rely less on the recommendations of other consumers. You should realize that the ratings out there come from a small and biased subset of imperfect people who evaluate products in imperfect conditions.”

Does this mean we stop reading reviews all together? No. But we can release ourselves from agonizing about whether to buy the product that got 3 ½ stars or the one that got 4 stars or feeling like we need to read through every review before we make a significant purchase.

Watch his TEDxESADE Talk now:

ABOUT THE AUTHOR

Bart de Langhe is a behavioral scientist and a marketing professor at ESADE Business School in Barcelona, Spain.

TED-Ed Blog » Money

How to raise financially responsible kids

Teaching them about spending and saving is good, but our lessons need to go beyond that, says financial planner Ellen Rogin.

ABOUT THE AUTHOR

Here’s why you shouldn’t put all your trust in online reviews

The bad news: Online user reviews don’t really match up with performance reviews, says behavioral scientist Bart de Langhe. But that means there’s also good news: We can stop obsessing over them.

ABOUT THE AUTHOR