As a father, I want to teach my children about money and the wise use of it. My father taught me to be responsible, to save, and to avoid debt as much as possible, and his lessons have served me well. Now I want to pass on those principles to my children, but it gets a little tricky in a world where mainstream financial advisors point in the opposite direction, encouraging reckless lending and government bailouts. Enter Bitcoin. Teaching our kids about Bitcoin can provide valuable lessons about money management that will make them successful money managers as adults and help them to avoid the excesses that afflict our current global economy.
No Barrier to Digital Money
One of the great things about kids when it comes to Bitcoin is that they have no psychological barriers to purely digital money. Although most financial transactions today are executed electronically, many adults still like to believe their money is “real,” by which they mean something they can touch and hold. When they complete a VISA transaction online, they still entertain the subconscious notion that physical dollars are being transferred from their bank to the merchant’s bank. So the digital nature of Bitcoin presents a mental hurdle for them.
The same is not true of kids: their entire lives have included the online world, so it is as “real” to them as the physical world. The idea of purely electronic money not only isn’t problematic, it is expected. So young people are ripe to embrace Bitcoin, and this openness can help parents teach them some fundamental virtues related to money management, i.e., personal responsibility and debt avoidance.
Bitcoin Teaches Personal Responsibility
One of the key rallying cries for Bitcoin is “Be your own bank!” While this sounds attractive to some – especially those in the libertarian camp – it is terrifying to many people, for it calls for greater personal responsibility. If you are your own bank, then you’re also responsible for safeguarding your funds. If you lose your online password to your bank account, it’s relatively easy to restore access to your money. If you lose your Bitcoin private key…you are not so fortunate.
But this is a good lesson for kids in personal responsibility. Instead of depending on others to bail you out when you make a mistake, they learn to be more careful and responsible in their actions. And they learn about the advantages of a system that relies on personal responsibility; if you are your own bank, you’re not dependent on the capricious goodwill of officials to keep their hands off your money, nor dependent on the arbitrary rules of the banking world which keep you from full access to it.
Bitcoin Encourages Kids to Save and Avoid Debt
One word sums up the financial crisis the world faces today: debt. Mountains and mountains of debt. Our entire financial system is built on debt, as is our money supply. And this debt mentality infects the average consumer. Want that pretty necklace? Buy it now and pay for it later! Would you really like an addition to your house? You can do it now, and finance it over the next 10 years! Debt has become second nature to everyone, without any thought of the consequences.
Bitcoin, however, introduces a new factor into the equation. First, unlike today’s government-issued currencies, Bitcoin is not created as debt. It is sound money, not dependent on the fickle whims of government officials. Second, Bitcoin’s deflationary nature encourages saving, not debt. For if the value of 1 bitcoin is expected to rise in the future, you are more likely to hold onto it than you are to spend it frivolously. You avoid becoming a slave to debt. As the ancient Biblical book of Proverbs says, “the borrower is the slave of the lender” (Proverbs 22:7). Who wants their children to be slaves?
Teach your kids about Bitcoin, helping them become not more cogs in the debt machine, but financially independent adults. Something any parent would want for their children.
What do you think? What is the value of teaching your kids about Bitcoin? Let us know in the comments below!
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